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UPDATE 2-Intel CFO says view unshaken by US debt downgrade
August 8, 2011 / 10:35 PM / 6 years ago

UPDATE 2-Intel CFO says view unshaken by US debt downgrade

* Sees emerging markets driving more growth

* Says PC supply chain remains lean

* Outlook uncertain for much of chipmarket (Adds detail on Intel, background on industry)

By Noel Randewich and Peter Henderson

SAN FRANCISCO, Aug 8 (Reuters) - Intel’s chief financial officer said he does not expect S&P’s downgrade of U.S. sovereign debt to hurt business at the top personal computer chipmaker this quarter, despite a sharp sell-off on Wall Street on Monday.

Weeks before global Standard & Poor’s took the unprecedented step of downgrading U.S. debt, Intel trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets but pointing to healthy expansion in China.

Families buying their first PCs in emerging markets, the source of half of Intel’s sales, are unlikely to put off their purchases because of troubles in the United States, CFO Stacy Smith said in an interview with Reuters on Monday.

“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.

Across the broader chip industry, uncertainty has grown in recent weeks. Unusually high U.S. unemployment and a deepening financial crisis in Europe have soured electronics manufacturers’ moods, a growing chorus of chip executives say.

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.

Intel remains notably more optimistic about the PC industry’s prospects than many investors and executives in other parts of the electronics industry.

“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.

“The only forecast we put out there for the business level was Q3, and, yeah, nothing that’s happened in the last week or so changes my view of Q3,” he added, shortly after the Dow Jones Industrial Average closed down more than 5.5 percent.

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.

“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 Bernard Orr, Gary Hill)

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