Despite the challenging economic environment, the release of Core i7 gives Intel a boost by strengthening its desktop product line and will keep the company one step ahead of rival AMD in the high-end desktop space. "They need to stay competitive," Ma said.
The Core i7 launch comes as overall PC demand is weakening in markets around the world. To what extent the new chips will convince buyers to upgrade their systems remains to be seen, and industry observers will be watching closely.
On Wednesday, Intel sent stock markets diving with a warning that it's fourth-quarter revenue will be sharply lower than the company's earlier estimates, signaling that demand for PCs was falling short of expectations. The chip maker also warned that gross margins, a broad measure of the company's profitability, will be lower than expected at 55 percent instead of the previous estimate of 59 percent.
"Revenue is being affected by significantly weaker than expected demand in all geographies and market segments," Intel said in a statement.
Intel said the revised gross margin estimate was primarily caused by lower revenue projections, but also blamed "other charges associated with the weaker-than-expected demand environment."
Those other charges include the cost of excess capacity and inventory write-offs, according to a research note put out by Credit Suisse analyst John Pitzer, who said the slowdown in PC demand will persist beyond December.
"We expect the weaker demand environment to persist into at least 1H09," Pitzer wrote, referring to the first half of next year.
As a result, Pitzer lowered his 2009 revenue forecast for Intel to US$33.8 billion, a decline of 12 percent compared to his 2008 forecast. He also said Intel's gross margin could fall to 50 percent during the first quarter of 2009 due to lower revenue, the cost of carrying excess production capacity, inventory write-offs, and startup costs for Intel's upcoming 32-nanometer process technology.
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