* 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)
By Noel Randewich and Peter Henderson
SAN FRANCISCO, Aug 8 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.
"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
"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.
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
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
"We have a couple of very small foundry deals ... but we
have no plans to enter the foundry business," he said.
(Reporting by Noel Randewich and Peter Henderson; Editing by
Gary Hill, Bernard Orr)