Intel business likely victim of credit crunch

The credit crunch is likely to hit, Intel’s, the world’s largest computer chip maker, sales of chips and as it warned, may lead to supplier insolvency and delays in product release.

The new economic risks to its business were noted by the company in its quarterly report submitted to the US Securities and Exchange Commission.

Intel, the producer of 80% of PC microprocessors, refrained from giving financial forecasts and scheduled its mid-quarter update for December 4.

Intel, in its third-quarter filing to the Commission noted that deferment of purchases by businesses and consumers could adversely affect product demand. It stated that uncertainty in global economic conditions posed risk to overall economy.

The follow-on effects of Intel’s credit crisis could be insolvency of key suppliers leading to product delays, customer inability in getting credit for purchase of Intel products and Intel facing difficulties in availing short term financing.

Intel had predicted fourth-quarter revenues of £6.22bn, which was less than normally expected in the period up to the year-end holiday season.

Intel informed that its current inventory levels were within limits but hinted a decline in demand might lead to writing off of excess inventory which could impact gross margins.

The world’s biggest investor in the most advanced chip-production equipment, Intel, had cut its capital spending budget from 5.2bn to $5bn for 2008.

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