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Summary:

Intel warned that its sales and capital spending would be down for the coming quarter. It’s not alone and its worries aren’t just about the PC market. ARM, Cisco and others are signaling that another tech downturn may be in the cards.

Intel expects its third-quarter sales to be between $300 million and $1.9 billion lower than previous forecasts, the chip giant said Friday. Many see this as a sign of the weakening PC market, especially after HP and Dell posted such disappointing results in part because of a slowdown in PC sales.

But this isn’t just about PCs. ARM, the company that provides the IP inside chips for virtually all of the smartphones and tablets out there, also warned that it anticipates slower sales ahead. Earlier this week it said it planned to halt recruitment efforts and said its customers such as Texas Instruments and Qualcomm are bracing for a slowdown in holiday sales of devices.

Most companies and chip analysts are citing the economic downturn in Europe as the reason for their new forecasts, and some are worried about the impact of further economic shocks. That’s right. This isn’t a PC slowdown or a gadget slowdown — or rather it is — but it’s also an economic slowdown. As my colleague Om Malik wrote last week, chips are the canaries in the tech sector coal mine. And when their sales drop the rest of the industry better make plans for their survival through some tough times ahead.

The chip companies can help forecast weakness in enterprise and consumer demand for tech. For a more enterprise focused viewpoint, keep an eye on Cisco’s numbers in November. It’s another company that tends to see the impact of downturn slightly ahead of the rest of the business. And despite having a decent quarter when it reported in August, Cisco’s CEO John Chambers also signaled concerns about the economic climate in Europe and fears for the months ahead.

So the chips are down and Chambers is worried. My advice to entrepreneurs is close those financing rounds while you still can.

  1. Luigi Ferguson Friday, September 7, 2012

    This makes perfect sense. We’re already at 50%+ of adoption in smartphone users in the US and globally overall smartphone sales are dropping.

    With several generation of mobile devices out there, there is a glut of powerful slightly older devices you can buy for a fraction of how much it cost previously.

    Android and Apple are already in the largest markets so there is less opportunity to drive shipments for these previous emerging markets.

    Windows 8 may provide some upside but that all depends on price points of the Surface and RT Windows 8 tablets.

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  2. Re: “…..(ARM) Earlier this week it said it planned to halt recruitment efforts and said its customers such as Texas Instruments and Qualcomm are bracing for a slowdown in holiday sales of devices….”

    If you r -read your cited ARM reference you won’t find any reference to Qualcomm “bracing for a slowdown..”, and I don’t believe that was or should be inferred from ARM’s comments.

    In fact, Qualcomm’s issue has been capacity constraint….. lack of adequate 28nm chip supply for its new MSM /MDM chipsets. Qualcomm has taken aggressive steps to ramp capacity including adding additional foundry partners.

    >>>>>>>>>>
    Goldman Sachs Simona Jankowski last month …., “following her meeting yesterday with CEO Paul Jacobs, CFO Bill KEITEL, and COO Steve Mollenkopf,” ….”…. writes that the company is set to experience a strong snap-back in demand in C4Q on the back of the iPhone 5 launch and other key device launches for the holidays, which are likely to benefit from catch-up demand after the pause over C2Q-3Q.”

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  3. the economy is not good and there are so many the competitors,we need see the data in all eyes.Behind the data we can get what ?

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