Intel emerging from turbulent first half, exec says

Intel's business is picking up, mostly driven by consumer demand for PCs

After a turbulent first half this year, Intel's business is looking up and expected to improve as PC shipments rise, a company executive said on Thursday.

Intel felt the impact of PC shipments slowing down in the first half, but consumer demand for PCs is rising and will continue to have a positive impact on Intel's business, said Stephen Smith, vice president and director of PC client operations and enabling, during a press event.

"We got a sense of the turnaround in the second quarter," Smith said. PC shipments picked up in the third quarter, and overall PC shipments in 2009 are expected to be higher than 2008, Smith said, citing IDC numbers.

IDC on Wednesday said that PC shipments worldwide will grow by double digits on a yearly basis through 2013, partly due to increased commercial spending and increased demand for portable PCs like laptops and netbooks. Shipments either dropped or were flat during the first three quarters of 2009 compared to last year.

The main driver for Intel's business over the last year has mainly been the consumer segment as commercial spending dried up, Smith said. The consumer segment will continue to grow faster than the commercial segment, and will continue to be an important part of Intel's business, he said. New consumer buying patterns may emerge as PC makers introduce new form factors.

Netbooks provide an example of how new form factors could impact the business, Smith said. Netbooks were introduced late last year and have become a success, Smith said. More than a year ago, people were questioning if netbooks would be a success, he said.

The comments come just a day after the U.S. Federal Trade Commission filed an antitrust lawsuit against Intel, accusing the chip maker of illegally using its dominant market position to stifle competition and deprive consumers of choice in the microprocessor industry. Intel however has denied the FTC's claims. Intel is the world's largest chip maker, with its processors going into more than 80 percent of PCs worldwide.

Intel is also preparing for the release of its next-generation of laptop and desktop processors, which should boost the company's business, Smith said. The company in February committed to spending US$7 billion over the next two years to revamp manufacturing plants. The company has already started manufacturing new desktop and laptop processors using the 32-nanometer process, an upgrade over existing chips made using the 45-nm chips. Intel has said that the new chips will be cheaper to manufacture, work faster and draw less power.

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