Intel cuts third quarter sales forecast on weak demand

Intel Corp has cut its third-quarter revenue estimates more than estimated with demand falling for its chips as customers pare inventories and businesses buy fewer personal computers.

Intel said it was scaling back capital spending due to the business slowdown. Intel's stock fell 3.7 per cent last afternoon, and shares of ASML Holding NV and other companies that make chip-manufacturing equipment were also affected.

Analysts had been expecting a revision of Intel targets after PC makers Hewlett Packard Co and Dell Inc warned of slow demand last month, a development made worse by the uncertainty in the global economy and a shift towards tablets and smart phones.

However, the 8 per cent reduction in the top chipmaker's revenue outlook was much more severe than expected and Intel also withdrew its full-year forecast.

The scaled-back outlook comes only days ahead of a major event where Intel would display an array of new generation processors that consume less power, which is central to its strategy of reinvigorating a stagnant PC industry.

According to some analysts, the size of the Intel cut was surprising and there was cause of concern due to weakness in PC sales to businesses and governments, that Intel called enterprise sales.