"The walls are up, and they took in some equipment, but they are delaying outfitting it. They don't want to call it mothballing it. They are delaying taking equipment orders until they are needed, and some equipment has been rerouted to Oregon," said McGregor.
Intel's two biggest fabrication sites are Arizona and Oregon, but there are other plants as well around the world. McGregor says his contacts within Intel manufacturing put the company's global utilization capacity at around 60%. Normally, Intel's fabs run at 95% and only come down when the equipment is being upgraded.
Quite a few of the fabs were taking 50% as many orders in Q4 as they did in Q3, said McGregor, and that's not just Intel, it's across the industry, he said. "It's happened to memory, processors, anything that went into PCs. Demand wasn't shaping up, and the outlook wasn't looking rosy," he said.
McGregor said that starting in September, all of the chip companies stopped buying raw materials. He talked to a company that provides chemicals to chip makers and they told him that literally overnight sales dropped 50%.
Could this be Intel seeing another collapse in the distance? McGregor thinks so. "Intel does try to keep a very good view in the entire channel. And when it gets to a certain point, they shut it down. To Intel's credit, I think they did see a lot of it. I think a lot of the other chip guys saw Intel was hitting the brakes and they followed, figuring Intel knew something they didn't," he said.
Intel declined to comment, citing the quiet period before announcing its first quarter earnings. Those earnings will be released after the market closes on April 17, and the earnings call will be the curtain call for CEO Paul Otellini, who retires next month after 39 years with the firm, the last eight as CEO.
Windows 8 has been viewed as the villain in PC sales stumbling, but it's not to blame, said Dean McCarron of Mercury Research, who follows the semiconductor industry. He blames the global economy.
"OEMs are all telling me it's the economy. There's not a lot of optimism out there. The U.S. has been soft since 2008, Europe is a mess and emerging markets have gone soft. They aren't driving growth anymore, it's more of a replacement market than a growth market," he said.
Windows 8 "doesn't help the situation. There was an excessive amount of emphasis on it. To lay the blame on Windows 8 would be too strong of an attribution. When I look at the market, the number one impact is just tablets. Mobile PCs are soft at the bottom end of the market," he said.
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