Intel reported solid second-quarter sales last month and offered an upbeat outlook for the second half of the year. Wall Street rejoiced this unexpected good news.
But the improving market for computer chips that Intel described could be more smoke than fire.
IDC reported Thursday that much of the improvement in PC chip sales during the period was due to refreshing inventory, not the result of improving demand for personal computers.
For instance, Intel’s shipments of its Atom processor for netbooks rose 34 percent from the first quarter, suggesting vendors had held off purchases and were now restocking their shelves.
“The significant sequential ‘snap-back’ rise in Intel’s overall processor shipments—particularly Atom shipments—while AMD’s overall shipments were about flat, indicate that the PC processor market didn’t recover in 2Q09,” says analyst Shane Rau. “Instead, the market balanced out due to Intel driving Atom processors into (vendors) who manufacture the systems, particularly in China and Taiwan.”
So what does that say about the rest of the year? Clearly with inventories now at more normal levels, the market can’t rely on further restocking. The fortunes of companies such as Intel will now rise and fall on the strength of PC demand itself – something that has been anything but certain this year.
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