Semiconductor industry on the mend

After months in the doldrums, the PC business seems to be improving as Intel boosted its fourth-quarter sales forecast claiming that demand for its processors had been better than expected, while rival AMD said that it is on track to become profitable again in the second quarter next year.

Intel now expects to see fourth-quarter sales of between $6.7bn and $6.9bn, compared with its previous forecast of $6.2bn to $6.8bn.

Chief financial officer Andy Bryant explained that fourth-quarter demand for PCs is better than the company predicted in October, and that gross margins will be above the midpoint of its previous targeted range of "47 per cent plus or minus a couple of points".

Scott Lawson, an analyst at Bank of America Capital Management, said: "The market has been a little more stable. The quarter has provided a little bit more upside for Intel."

AMD meanwhile said that it too expected higher sales in the quarter, driven by strong demand for its Athlon XP chips. The company claims that it is still on track for profitability in the second quarter of 2002.

AMD also said that it expects a narrower fourth-quarter loss than its third-quarter results. Revenue is expected to rise by 10 per cent or more compared with the third-quarter level of $765.9m.

Giga Information Group analyst Rob Enderle said that, although both Intel and AMD are indicating strong numbers for this quarter, it is mostly consumer as opposed to corporate business.

"This means that the first quarter will be back to dismal numbers but, at least for a quarter, things are looking bright," he explained.