Intel's Sandy Bridge Will Not Skyrocket Sales of Microprocessors - Analyst

From X-bit Labs: Intel Corp. is extremely optimistic about its code-named Sandy Bridge central processing unit (CPU) and the company is eager to show that system builders are also very excited about the new chip, which brings a lot of tangible improvements compared to predecessors. However, an analyst believes that Intel is overestimating its Sandy Bridge product and there would be no uptick in sales of PCs because of the new chip launch.

“Although Intel seems to believe that its upcoming Sandy Bridge processor will drive demand, we cannot find evidence of delayed PC purchases for it. Sandy Bridge offers improved graphics [performance], but it appears to be evolutionary, not revolutionary. As a result, we expect normal seasonality for Intel in Q1 with revenue declining 9% [sequentially] from $11.1 billion in Q4 to $10.1 billion in Q1, below consensus of $10.7 billion," wrote Christopher Danely, an analyst with J.P. Morgan analyst, in a note for customers.

Recently a number of analysts said, and Intel implied, that Sandy Bridge microprocessors will revitalize the market of personal computers in Q1 2011 because of improved performance of microprocessor and graphics engines. Some even believe that certain consumer are not buying new computers and wait for Sandy Bridge to show up, thus, creating deferred demand for PCs.

It should be noted that the first quarter of every year is traditionally weaker compared to the fourth quarter of the previous year. As a result, Sandy Bridge has to be very good in order to catalyze consumers to replace their PCs in Q1 2011 after exhausting purchases in late 2010. Meanwhile, even though Sandy Bridge will considerably improve performance of x86 processing cores and integrated graphics core, the chip will lack DirectX 11 functionality, something that even low-end code-named Zacate chip from AMD will support.

On the other hand, thanks to much improved performance of built-in graphics core of Sandy Bridge, system makers will be able to drop low-end integrated graphics from ATI or Nvidia, which will reduce their costs and will boost profitability, or will allow them to make PCs more affordable.

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