Intel, AMD and the State of the Economy - What to Expect from Intel (
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While Intel's overall financial health is better than AMD's,
and it has been able to deliver a steady stream of new products in the past six
months, there are some problems, too.
In March, the company announced that it is expecting lower gross margins within
its NAND flash memory business, which could put a dent in the bottom line. The
overall NAND and DRAM (dynamic RAM)
market is suffering due to oversupply.
With AMD's sales off this quarter,
analysts will look to see if OEMs turned to Intel to pick up the slack,
especially on the server side, and, in turn, boost the company's profits. If
not, it could show that the overall market for PCs and servers has begun to
slow down as the U.S.
economy continues its sluggish pace.
In a meeting with analysts in March, Intel executives told their audience
that much of the company's business now comes from overseas, with should lessen
its reliance on the U.S.
market.
Roger Kay, an analyst with Endpoint Technologies Associates, said some of
the recent news out of Taiwan
might indicate that the PC market remained fairly stable in the first quarter
despite the usually seasonal downturn. This could help Intel meet its quarterly
expectations.
One reason the market has remained stable is that there is still a demand
for notebooks, which continue to drive the market. If that's the case, Kay
said, he believes that the industry will have to wait until the second quarter
or later to really determine whether the PC market is suffering along with the
economy.
"Right now, I think there is enough demand that the PC market will hold
OK for now," Kay said. "I do think the computer industry will sustain
some aftershock if the other economic shoe drops. I think if that happens,
you'll see it show up more in the second quarter."
McCarron said he does not believe Intel will detail any new products during
its first-quarter disclosures, as the company just held its spring Developer
Forum in China
earlier in April. However, Intel could discuss its plans to ramp up its line of
Atom
chips for mobile Internet devices and low-cost notebooks.
"Intel might talk a little more about 'Silverthorne'
and 'Diamondville,' and if they are not in full production right now, I expect
them to start ramping those chips up for production very, very soon,"
McCarron said. "Intel could also give an update on its overall 'Penryn'
[45-nanometer] line."
Desktops & Notebooks 
