Intel had announced in January that sales for its first quarter would drop about 15 percent, but now the company said the decline likely will be 25 percent. To help make up for the shortfall, the Silicon Valley bellwether said it will trim its 86,000-person workforce through attrition over the next nine months. What's gotten worse is the server business and the flash memory business.
Flash memory is used in cell phones and other gear to store information.
Sony Corp. and Mitsubishi Corp., for instance, announced last fall that they will use Intel flash memory for a new line of cell phones capable of connecting to the Internet. Other chipmakers, including Broadcom Corp., Vitesse Semiconductor Corp. and LSI Logic Corp., also have lowered their forecasts in recent weeks. David Hilal, a senior analyst for Friedman, Billings, Ramsey Group Inc., said he had anticipated that Intel would follow suit but did not expect the cut to be so severe. The company recently announced plans to more aggressively push sales of its Pentium 4 chip. Intel delivered its revised revenue estimate after the market closed.