Shares in Intel, the chipmarker which employs about 3,400 people at Leixlip, Co Kildare, lost more than 5 per cent after two Wall Street analysts said price wars in the semiconductor and personal computer sectors have dented its average selling price.
The stock was down $1.12 (€1.26) at $30.56 shortly after noon in New York after bouncing back slightly from a session low of $30.08. Volume exceeded 30 million shares.
Intel, the world's number one chipmaker, derives 80 per cent of its revenues from supplying chips to computer makers and has been hit hard by the global slowdown. In the past three quarters, Intel has had to warn of lower sales as demand for PCs slowed.
Last month the company said it will seek up to 170 voluntary redundancies to cut costs in its Leixlip plant. It wanted such a reduction, which will cut its headcount by 5 per cent, to meet "current business levels". In March it halted production of a $2 billion extension of the plant in Leixlip.
Intel has had to remain alert as it fights for market shares with chief rival Advanced Micro Devices, even as it watches the top two PC makers, Compaq and Dell wage their own price war. Compaq and Dell have significant operations in the Republic.
Salomon Smith Barney analyst Mr Jon Joseph warned yesterday that hopes for a meaningful back-to-school selling season for personal computers are "rapidly fading", and cut his forecast for Intel's third-quarter earnings to eight cents a share from 11 cents.
Also yesterday, Lehman Bros analyst Mr Dan Niles lowered his estimates for Intel's average selling price. "Margins will be under more pressure than originally anticipated," he said in a note. "For those who thought the price war was already aggressive, you haven't seen anything yet."
On Friday, Intel's chief executive Mr Craig Barrett said he expects demand to rebound in the computer industry, now that an inventory build-up had ended and new technologies offer a fresh impetus to growth.
Mr Barrett said he could not say when robust demand would return, but added that Intel was investing billions of dollars in anticipation of a recovery.
