Low Utilization Rates at Intel Chip Factories indicate bad times for the PC Industry

With Intel factories not turning out chips for PCs at its usual rate, it signals a downturn for the PC industry but also the fact this isn’t going to work well for Windows 8 either.

In explaining the reasons for Intel’s low productivity, Jim McGregor, principal analyst for Tirias Research, in a phone interview, said, “Intel’s thinking was, at the end of 2012 we got the first true ultrabooks coming out, that’s going to generate a lot of demand. And we’ve got Windows 8 coming out and that’s also going to generate lots of demand. And we’ve got design wins in mobile. Well, guess what, three strikes.”

Numerically speaking, factory utilization is down to 60 percent, and according to McGregor, hasn’t been this low since 2000. What this means for Intel, with production lines and plants not being utilized to full capacity, and it is costing the company a lot of money as each day passes.

But what this also points to is the fact that PC sales have been on the decline and the recent figures from Gartner and IDC present clear evidence of this trend. With that said, the industry is experiencing a boost but it’s due to tablets and smartphones.

On the other hand, experts are blaming Windows 8 for this drop in PC sales yet there’s more than meets the eye as it’s really the global economy that has changed things completely – with Europe dealing with a crisis while emerging markets are going soft.

Alternatively, Intel has just signed their first foundry customer, Altera, yet their utilization won’t go up until next year when their contract begins.

With that said, it’s also possible that as soon as their inventory clears up, Intel might see those numbers go up again.