Intel feels Thai flood effect

Vendor revises down its Q4 forecasts as HDD supply shortages continue to bite

Intel is the latest IT vendor to be hit in the pocket by the Thai floods, announcing this week that its fourth-quarter results will be below expectations due to hard disk drive (HDD) supply shortages.

The processor giant said it expects Q4 revenue to hit $13.7bn (£8.8bn, plus or minus $500m) on both a GAAP and non-GAAP basis, lower than the previous expectation of $14.7bn (plus or minus $500m).

"Sales of personal computers are expected to be up sequentially in the fourth quarter," it said. "However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of HDD supply shortages."

As a result, Intel said it expects HDD supply shortages to continue into Q1, followed by a rebuilding of microprocessor inventories as HDD recovers during the first half of 2012.

In addition, the vendor said it expects Q4 gross margin to be 64.5 per cent, lower than the previously expected 65 per cent.

The pain is being felt across the board, with figures from market watcher Context revealing unit sales of HDDs in western Europe in week 40 of 2011 were about a third of what they were in week 39. In turn, the analyst claimed this was causing sales of solid state drives (SSDs) to soar.

One of the hardest-hit vendors was Western Digital, which recently revealed that the Thai floods could wipe up to $275m off its second-quarter earnings.