Laptop sales weaken to hurt chipmakers

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Analysts claim that the poor global economy is seriously weakening the laptop market, with chipmakers suffering from the fallout.

Notebook manufacturers, distributors and component suppliers in the US and Asia are reporting weak demand and order cancellations.

Meanwhile, analysts said, the continued financial turmoil is pushing those who are buying toward low-end notebooks and netbooks, which will ultimately impact chipmakers' margins.

"Clearly the economic slowdown is spreading to notebooks and we're seeing it in two ways," said JoAnne Feeney, a senior chip analyst with FTN Midwest Securities.

"One is in lower unit shipments, but also a mixed shift to cheaper units. And that's going to filter down through the semiconductor world."

Notebook sales have become more critical to the health of chipmakers, as they make up a larger and larger portion of PC sales every year.

Feeney now expects fourth-quarter shipments of semiconductors for notebooks to fall 5 per cent to 10 per cent from the previous quarter, compared with a previous forecast for an increase of 10 per cent to 15 percent.

She expects Intel, the world's biggest chipmaker, to cut prices to compete with rival Advanced Micro Devices as demand shifts to lower-cost notebooks.

Laptop sales have become more critical to the health of chipmakers, as they make up a larger and larger portion of PC sales every year.

ThinkEquity analyst Vijay Rakesh said checks with Taiwanese notebook manufacturers point to a 20 percent to 25 percent fourth-quarter sequential decline in notebook shipments.

He also sees more and more customers flocking to cheaper netbooks. He calls netbooks a "big double-whammy. They're lower margin, it's like Frankenstein. You created it, you hate it but you cannot kill it because that's what selling."

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