As a result, Intel officials said they expect first quarter revenue to decline by about 15 percent from the fourth quarter, though they maintained a positive outlook.
"We're trying to invest to ensure that we can increase the differentiation from our competitors," Intel chief financial officer Andy Bryant said in an interview. "But when the economy turns up, we'll have the products that consumers will want."
Intel, which serves as a bellwether of the general health of the personal computer industry, had joined other PC makers in December in lowering its earnings forecasts, saying poor PC sales worldwide would lead to flat growth for the fourth quarter.
"They're going to be held up by the same downside of the economy that PC makers are struggling with," said industry analyst Jack Gold of the Meta Group.
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The Associated Press and Reuters contributed to this report.