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RealTime IT News

Intel Chips Start Flying Off the Shelves

Intel says its semiconductor business overall is performing better than it expected. So much so, the company surprised investors Friday with a sales forecast two weeks ahead of its scheduled Mid-quarter update.

The Santa Clara, Calif.-based chip making giant said it now expects third-quarter revenue to be between $7.3 billion and $7.8 billion. The company previously said its range would be between $6.9 billion to $7.5 billion.

During a conference call, chief financial officer Andy Bryant said revenue of Intel's microprocessors, chipsets and motherboards has been unexpectedly strong across all geographical regions and channels especially in July and the first two weeks of August. Bryant said the "pleasant surprise" came from dealers, distributors, and OEMs. Demand for the company's communications business, he said, remains soft.

"The last three quarters we've said that revenues for microprocessors came in above a midpoint of what you would normally expect," Bryant said. "This change is a little bit more than that, which is why I felt we had to come out and tell people we were actually seeing real shipments, real product leaving Intel at a higher rate than expected. The real question will be does the momentum we've seen in the first half of the quarter sustain itself?"

To that end, Intel also said its gross margin should come out to be 56 percent, plus or minus a couple of points, compared to previous expectation of 54 percent, plus or minus a couple of points. All other expectations are unchanged and the company said it still plans on updating its investors on September 4.

The expectation falls right in line with what analysts are currently saying about a revival in PC sales.

Thanks in part to a stronger-than-expected surge in consumer activity in the U.S. and Europe during the second quarter, Gartner is forecasting worldwide PC shipments at a growth rate of 9.6 percent in the third quarter, with unit shipments now expected to reach 39.8 million. Prior to the revision, analysts projected a 8 percent increase.

For the full year, Gartner projects PC shipments to grow 8.9 percent to reach 161.3 million units. A rise of 7.2 percent was previously forecast.

"The consumer is the main reason for the PC growth. Worldwide, the consumer is acting very strong," said Kiyomi Yamada, Gartner's industry analyst for computing platforms worldwide group.

Various semiconductor trade groups have also seen a sharp pickup in recent months and are now revising their yearly estimates to reflect the positive trend.