Intel scales down Q1 profit forecast as chip prices drop

Intel Corp lowered its profit forecast for its fiscal first quarter on Monday, blaming the shortfall on a steeper-than-expected drop in prices for memory chips.

The world's largest semiconductor maker said slumping prices for a type of memory called NAND flash depressed profits more than anticipated. NAND flash is commonly used in portable electronic devices like digital cameras and MP3 players.

Intel its gross profit margin would come in at 54 percent of revenues, plus or minus a percentage point. That's down from its previous forecast of 56 percent, plus or minus a couple percentage points.

The company said its other guidance had not changed, including its expectation of revenue between US$9.4 billion and US$10 billion for the quarter. Analysts surveyed by Thomson Financial on average expect Intel to ring up sales of US$9.7 billion.

Intel expected to provide more details on the shortfall today during a meeting with investors at its Silicon Valley headquarters.

Intel the fifth largest maker of NAND flash, behind Samsung Electronics Co, Toshiba Corp, Hynix Semiconductor Inc and Micron Technology Inc, a ranking by market research firm iSuppli Corp shows.

NAND makers are likely to look back "with nostalgia" last year, a year in which sales grew more than 12 percent to US$13.9 billion, iSuppli said.