Intel Tightens its Expectations

Chip giant still suffers from its Flash memory 'hangover' as it narrows its expected range of revenues.

Intel tightened up its second quarter revenue expectations to between $6.6 billion and $6.8 billion.

During its mid-year update Thursday, the world's largest chip-maker said it was narrowing its previous guidance of $6.4 billion to $7 billion.

The company said its Intel Architecture business is trending to the high end of the normal seasonal pattern. But it tightened up its sales expectations in part because demand for communications products remains soft, such as its new Centrino wireless-enabled chipset and flash memory devices that are used in digital cameras.

"This quarter actually has unfolded almost across every element as we would have anticipated as the quarter began," Intel CFO Andy Bryant said during a conference call to investors.

As previously reported, there are currently 58 different models of Centrino shipping compared to the 34 versions when the chipset first came out.

The company said it expects upwards of 125 designs to be available for sale by the end of the year. Intel has been seeing vendors put its chipsets in systems ranging in style from tablet PCs to thin-and-light designs with large screens to ultra-mobile systems that weigh less than three pounds. In some cases these mobile systems can achieve greater than five hours of battery life on a single charge.

Compare that to earlier this year, when Intel had a glut of Flash memory. Analysts say Intel has the wherewithal to re-capture in the Flash segment. In fact, the only question at this point is whether or not Intel has extra PC processors on hand.

Bryant likened the repricing of the Flash memory to a "hangover."

Analysts said they expected motherboard shipments to drop 12 percent quarter-over-quarter due in part to lower demand as a result of SARS, foundries are seeing continued strength in orders from the PC sector and Taiwan notebook shipments are expected to advance as much as 5 percent compared to previous quarters.

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