UPDATE 3-Emerging markets comfort Intel CFO as stocks fall
* Sees emerging markets driving growth
* Says PC supply chain remains lean
* Outlook uncertain for much of chip market (Rewrites first paragraph, adds detail on Intel, background)
SAN FRANCISCO, Aug 8 (Reuters) - Intel's business is on course despite the meltdown in global stock markets and U.S. sovereign debt downgrade, thanks to demand in developing markets, its chief financial officer said.
In sharp contrast to panicked investors who sent the Dow Jones down more than 5 percent on Monday, an unruffled Stacy Smith said consumers in booming economies like China and Brazil that now make up half of Intel's sales were not scared by U.S. issues.
"When your country is doing well, you know, you're probably somewhat inoculated from some of the shocks going on elsewhere in the world," he said in an interview with Reuters on Monday.
Intel's share price has bumped along at a low valuation for some time as investors have clamored for the Santa Clara, California company to move faster and more aggressively into mobile devices, like smartphones and tablets. Intel chips won't be in smartphones before next year, for instance.
Smith, who himself carries three smartphones and also owns a tablet, insisted there were no signs of problems to make him change his business forecast. "Nothing that's happened in the last week or so changes my view of Q3," he added.
He spoke shortly after the Dow Jones Industrial Average closed down more than 5.5 percent in reaction to S&P's cut of the U.S. sovereign debt rating.
While analysts say the direct impact on the economy from the credit rating downgrade itself is limited, a sustained drop in share prices would have a negative impact on wealth, and likely force both consumers and businesses to hunker down.
A few weeks ago, Intel trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets but pointing to healthy expansion in China.
Intel could see more signs of trouble later this month as its manufacturing customers gauge demand for the normally-busy back-to-school season.
"Things could materially change, not just for Intel but for many companies later in August depending on feedback the supply chain gets about back to school," said Robert W Baird & Co analyst Tristan Gerra.
For years technology analysts predicted developing economies would leapfrog past desktop computers to buy thin, fast, Web-connected portables. Instead, Europeans and Americans have turned to the lighter devices while emerging market buyers have started off with robust PCs the whole family can use and that bring Intel big profits, Smith said.
Intel remains notably more optimistic about the PC industry's prospects than many investors and executives in other parts of the electronics industry.
Major chip companies like ARM Holdings (ARM.L) and Texas Instruments TXN.N have warned that spending during the crucial holiday season could fall well short of expectations. [ID:nN1E76P0SU]
Even blockbuster expectations for smartphones beyond Apple Inc's (AAPL.O) iPhones have cooled slightly.
"I don't think that the specifics of the debt downgrade of the U.S. changes the overall business trajectory that we've been seeing," Smith said of Intel. He declined to discuss the outlook for the fourth quarter.
Last month, Intel forecast current-quarter revenue of about $14 billion, give or take $500 million, better than the $13.5 billion analysts had expected on average. [ID:nN1E76I25R]
Its shares are down almost 16 percent since hitting a year's high in May, but that vastly outperformed the plunge of roughly 24 percent by the Philadelphia semiconductor index .SOX.
Intel, whose stock fell 3.27 percent on Monday, is not planning to start a new venture making chips for chip design companies, Smith said, knocking down speculation by some analysts.