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Lowdown on Intel's Q1 performance

Posted: 18 Apr 2013     Print Version  Bookmark and Share

Keywords:PC market  netbooks  notebooks  Intel chips  market report 

IHS predicts PC market conditions will improve in the second half of the year, as new mobile products—i.e., ultrathins and Ultrabooks—drive market growth. Global shipments of ultrathin and Ultrabook PCs will nearly triple in 2013, mostly driven by increased sales in the second half of the year.

Intel is expected to see improved sales as it rolls out new microprocessors targeting these markets.

Intel appeared to react with great agility to weakening demand for its products, cutting down its inventories very rapidly in the fourth quarter of 2012 to avoid being stuck with excess stockpiles. The company in the fourth quarter was the most aggressive of all semiconductor suppliers in reducing its inventories, cutting them by 11 per cent, or $585 million, compared to the third quarter of 2012—the largest decrease on a dollar basis of any chipmaker during the quarter, according to an IHS iSuppli estimate.

Worldwide semiconductor inventory

Quarterly change in inventory levels of semiconductor suppliers (global inventory in millions of U.S. dollars)
Source: IHS iSuppli Research, April 2013.

"Intel was one of many major semiconductor suppliers that indicated in their fourth-quarter financial calls that inventories would be down or flat in the first quarter," said Sharon Stiefel, analyst for semiconductor market intelligence at IHS. "These semiconductor suppliers kept their manufacturing capacity utilisation rates relatively low to meet the projected overall reduction in demand in the first quarter. With orders for most semiconductor companies expected to pick up after the first quarter, a flexible, strategic approach to factory utilisation and inventory reduction has been a key factor in maintaining profitability for most suppliers.

Intel's inventory liquidation partly was due to a reduction in production as the company migrated to a new process technology for manufacturing its chips: 14nm lithography, Stiefel said.

Intel in 2012 held a 5 per cent share of the market for digital base band and applications processors used in mobile phones and other mobile devices. Aside from its legacy Infineon business, Intel had seen some design win activity from its Atom product line in smartphones from Lenovo, Motorola and various Chinese brand OEMs. Furthermore, Intel has introduced its LTE platform.

"IHS expects Intel to continue to attempt to build off these early wins and ramp penetration in the mobile platform market—specifically in smartphones," said Francis Sideco, senior director for consumer electronics and communications technologies at IHS. "However, even if Intel is successful in this area in 2013, it won't enjoy rapid growth, but rather slow and steady progress. The company faces significant challenges because of the momentum and positioning of strong incumbents such as Qualcomm, which holds a market share in the mobile-phone semiconductor business that is currently seven times larger than Intel's."


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