* Says customers reducing inventories
* Sees Q4 revenue $13.7 bln vs $14.65 bln Street View
* Non-GAAP gross margin forecast is cut to 65.5 pct
* Shares down 4.8 percent
(Adds detail on Nvidia, solid-state drives)
By Noel Randewich
Dec 12 Intel Corp (INTC.O) warned that
hard-disk drive supply shortages would hurt its current-quarter
revenue, the latest heavyweight in the PC industry to caution
about the effects of flooding that has crippled factories in
The warning sent shares of the world's top chipmaker down
4.8 percent and weighed on Wall Street.
Hundreds of people have died in flooding in Thailand that
has caused billions of dollars in damages since late July and
disrupted international supply chains in the PC and automobile
PC makers have been scrambling to buy increasingly scarce
hard drives after the flooding shut down factories in the
country, which is the world's No 2 exporter of the components.
"In the last two weeks, as the supply became more apparent,
we saw a substantial change in our order rate. Most of our
customers are concerned the shortage will continue -- especially
through the early part of the first quarter," Intel Senior Vice
President Tom Kilroy told analysts on a conference call.
Major PC makers including Hewlett Packard (HPQ.N),
Dell DELL.O, Lenovo (0992.HK) and Acer (2353.TW) since
October have warned to varying degrees that they may build
fewer PCs as they use up the current stock of hard drives and
struggle to replace them.
Intel said its customers are reducing their stock of chips
in anticipation of the hard drive shortage continuing early next
year, although it said it still expects sales of PCs to be up in
the fourth quarter.
"This is Intel coming to terms with it," said Stifel
Nicolaus analyst Kevin Cassidy. "I think Intel sees a lag effect
as inventory gets worked down. Then they'll see an accelerated
effect as inventories rebuild."
Cassidy and other analysts pointed to graphics chipmaker
Nvidia (NVDA.O) as among the only big players in the PC supply
chain that have not warned investors about the effects of the
drive shortage. Its shares were down 3 percent at $14.45.
Damage caused by the floods is expected to shrink global
hard drive output by about a third in the current quarter.
Western Digital WDC.N, the hard drive manufacturer hit
hardest by the floods, this month resumed production and warned
of tight global supplies into next year. [ID:nN1E7B01VP]
California-based Western Digital, which vies with Seagate
Technology (STX.O) for the title of the world's largest maker
of hard drives, expects a world shortage of 60 million hard
drives in the December quarter.
Seagate's Thai plants have been largely unaffected by the
catastrophe, but production has been curtailed due to tight
component supplies as factories of some key suppliers were
Intel Chief Financial Officer told investors on the call
that he expects the shortage to accelerate the adoption of
solid-state drives as the main storage devices in PCs.
Made with NAND semiconductors, solid-state drives are much
faster than hard drives but are also a lot more expensive and
are currently used only in high-end PCs like Apple's (AAPL.O)
Intel said quarterly revenue is now seen at $13.7 billion,
plus or minus $300 million, below a previous forecast of $14.7
billion. Analysts' average forecast is $14.65 billion, according
to Thomson Reuters I/B/E/S.
Intel said non-GAAP gross margin is expected to be around
65.5 percent versus previous expectations of 66 percent.
Intel shares were down 4.8 percent to $23.82 in afternoon
(Reporting By Nicola Leske and Paul Thomasch; Editing by John
Wallace, Bernard Orr)