Intel Blames Thai Floods For $1 Billion Cut In Revenue Forecast

Computing giant Intel Corp has lowered its 4^th quarter forecast for this year by $1 billion, citing the devastating floods in Thailand as the reason for a worldwide shortage of hard disk drives.

The world’s largest chipmaker said that its revenue for the quarter should fall to around $13.7 billion, plus or minus $300 million. Earlier in the year, Wall Street analysts had previously predicted revenues to be around the  $14.7 billion mark.

Computing giant Intel Corp has lowered its 4^th quarter forecast for this year by $1 billion, citing the devastating floods in Thailand as the reason for a worldwide shortage of hard disk drives.

The world’s largest chipmaker said that its revenue for the quarter should fall to around $13.7 billion, plus or minus $300 million. Earlier in the year, Wall Street analysts had previously predicted revenues to be around the  $14.7 billion mark.

But the massive flooding in Thailand left Intel with no other choice but to revise its predictions. Thailand is the world’s second largest exporter of computer components, behind China, and has already admitted that its output of hard disk drives in October dropped by 52 percent against a year earlier, after the worst flooding in the country in nearly half a century.

Since then, PC makers have been scrambling to buy increasingly scarce hard disk drives. Intel believes that the global hard-drive supply shortage could continue into the first quarter of 2012.

[quote]”In the last two weeks, as the supply became more apparent, we saw a substantial change in our order rate. Most of our customers are concerned the shortage will continue,” said Intel’s Senior Vice President Tom Kilroy in a conference call with investors, as quoted by Reuters.[/quote]

Major PC makers including Hewlett Packard, Dell, Lenovo and Acer have already warned they may have to build fewer PCs in the coming months due to the struggle to replace their current stock of hard disk drives. Last month, AMD also announced that it would cut 1,400 jobs with personal computer sales slowing and delays in manufacturing.

Intel, which makes microprocessors for four out of every five PCs sold, said that it was later than other companies in reporting the effects of the Thai floods because of its efficient supply chain, with orders only dropping off in the past two weeks.

Related: Global High-Tech Supply Chain Shaken by Japan Crisis

As a direct consequence of the announcement, shares of the Santa Clara based company fell by 4 percent on Monday to $24 per share. Intel’s rivals Advanced Micro Devices Inc and Texas Instruments also saw their shares slide by 4.3 percent and 2.7 percent respectively.

Worldwide PC shipments are also expected to fall by 3.8 million units to 84.2 million in the first quarter of 2012 due to the flooding, according to a forecast by the IHS research firm last week.