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Last Updated: Thursday, 2 September, 2004, 22:17 GMT 23:17 UK
Intel gloom weighs on chip stocks
Intel HQ
Intel has taken the gloss off the market rally
Computer chip maker Intel has unveiled a weaker than expected sales outlook, forcing microchip stocks sharply lower.

Intel said third quarter sales would fall within a range of between $8.3bn and $8.6bn, down from its previous estimate of $8.6bn-$9.2bn.

Intel blamed weak demand for computer chips, with customers still selling unsold stock from their inventories.

Analysts said the industry growth cycle had peaked, with many expecting a slowdown for the rest of 2004.

Earlier on Thursday, the US Semiconductor Industry Association reported that economic uncertainty and swelling inventories had led to slower sales.

"We're not looking to see things pick up much in the fourth quarter," said Kevin Rottinghaus at FTN Midwest Research.

Weaker demand for flash memory products, used in mobile phones, also looked set to affect Intel's sales.

Intel shares fell 7% in after-hours trading to $20.11, their lowest point since June 2003.

Other shares in the sector followed suit.

Applied Material dropped 3.5%, and graphics chip maker Nvidia fell 4%.




SEE ALSO:
Intel in new chip breakthrough
30 Aug 04  |  Business
Intel sales get mobile phone lift
13 Jul 04  |  Business
Intel focuses on new 'super' chip
07 May 04  |  Business
Intel's new chips target mobiles
13 Apr 04  |  Technology


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