PC sales slowdown hits chip manufacturers

The top chip manufacturers in the US yesterday all issued profit warnings. Intel, Motorola and National Semiconductor all predicted that sales will slow in the coming months due to a slump in demand for PCs.

Motorola in particular has been hit hard, its share price dropping 11 per cent this week to around $16. The company is struggling in its European GSM handset battle with Nokia, and is making slow progress in the US handset market. Intel, which had expected growth of between four and eight per cent, has been hit by slowing PC sales in the US and Europe, and said that sales and earnings this quarter will be flat. Its shares were almost unaffected as they have already fallen almost 60 per cent since August. National Semiconductor posted second quarter profits of 56 cents a share, around five cents more than analysts expected, but also warned of a slowdown in growth for the third quarter. PC and software company shares have all been hit as European and US PC sales fail to maintain their high growth rates. Microsoft is one of the latest casualties with its share price falling by six per cent to $53 yesterday. Earlier in the year Microsoft shares were at $120.