Intel saw its revenues fall 1% in the first three months of 2007, as it continues a bruising price war with smaller rival Advanced Micro Devices.
Intel and rival AMD are fighting hard for market share
The world's largest chipmaker, Intel's first quarter revenues totalled $8.85bn (£4.4bn) compared with $8.94bn for the same period a year earlier.
Intel's profits rose 19% to $1.6bn, but this increase from a year before was lifted by a one-off tax gain.
It expects revenues to fall again in the second quarter before recovering.
Despite Intel's drop in revenues, its latest results are better than those of Advanced Micro Devices (AMD).
AMD warned last week that its latest quarterly revenues should be about 20% below expectations, due to falling prices and lower unit shipments, as it and Intel continue to battle it out for business.
"Intel's first quarter came in line and AMD came up massively short, so Intel clearly took back some share in the quarter," said American Technology Research analyst Doug Freedman.