Shares in Intel, the world's largest chipmaker, fell almost 7 per cent by lunchtime yesterday following an analyst downgrade on concerns that PC demand would be lower than expected.

Intel is the dominant supplier of microprocessors and other types of chip to the PC industry.

The company also received news that Broadcom, a fast growing rival in the communications chip markets, had vowed to fight a patent infringement lawsuit Intel filed last week.

Mr Ashok Kumar, an influential analyst at US Bancorp Piper Jaffray, downgraded Intel to a "buy" from "strong buy". In a research note, he cited concerns that unexpected weakness in PC demand would lead to lower sales.

He also said Intel faced a challenge in producing microprocessors running at high speeds and would need quickly to ramp up production of its latest Pentium 4 micro-processor.