Nov. 13 (Bloomberg) -- Intel Corp. fell as much as 6.7 percent in early U.S. trading after slashing its fourth-quarter sales forecast, stoking concern that the financial crisis is stifling global technology spending.

Intel, whose chips run more than three-quarters of the world's computers, reduced its revenue estimate by about $1 billion late yesterday, citing ``significantly weaker'' demand across its entire product line. Its profit margin also will fall short of an earlier prediction.

Intel joined two chip-industry bellwethers in reporting slackening demand yesterday, suggesting that worldwide orders for computers and gadgets aren't resistant to the economic slowdown. Applied Materials Inc., the top maker of semiconductor equipment, and National Semiconductor Corp., the supplier of chips for the biggest mobile-phone companies, are cutting jobs as they cope with their worst slump since the dot-com bubble burst in 2000.

``It's shockingly bad. I and most of us have been wrong on how bad this could get,'' said Hans Mosesmann, an analyst at Raymond James & Associates Inc. in New York. ``The holiday season is a bust. Scratch 2008 out and maybe some kind of recovery will come, but this is a disaster.''

Intel fell as much as 90 cents to $12.62 in trading before U.S. exchanges opened from the close of $13.52 yesterday. Intel has lost almost half its value this year. The MSCI Asia Pacific Information Technology Index dropped as much as 6.5 percent.

Sales Forecast

Morgan Stanley cut its price target for Intel to $13 from $17 and UBS AG slashed its estimate to $18 from $21.50. Piper Jaffray Cos. reduced its price goal to $18 from $22.

Worldwide technology spending in 2009 will grow less than predicted, research firm IDC said yesterday. Spending will rise 2.6 percent, down from an earlier estimate of 5.9 percent, the Framingham, Massachusetts-based company said. Growth in the U.S. will probably slow to 0.9 percent, less than a quarter the pace IDC forecast in August.

Intel's fourth-quarter revenue will be $9 billion, plus or minus $300 million, the company said yesterday. Santa Clara, California-based Intel originally predicted sales of between $10.1 billion and $10.9 billion. The company gets 80 percent of its sales outside the U.S., a sign the slump has spread to the rest of the world.

``This is going to be a deep recession,'' said Pat Becker, who helps oversee $1.7 billion in assets at Portland, Oregon- based Becker Capital Management Inc., including shares of Intel and Microsoft Corp. ``The market has gone down in line with those expectations, and you're seeing now the numbers follow that.''

`Just Starting'

Intel's report came minutes after National Semiconductor reduced its revenue forecast and announced plans to cut about 5 percent of workers. Applied Materials reported a 45 percent drop in fourth-quarter profit and said it will cut 1,800 jobs.

``It's just starting now -- it's not just going to be a few months,'' Applied CEO Mike Splinter, a former Intel executive, said yesterday in an interview. ``There are going to be job losses going into the first half of the year. That's going to drive down the economy more.''

Both Applied and National are located within three miles of Intel in California's Silicon Valley. Advanced Micro Devices Inc., Intel's biggest rival in the market for personal-computer processors, will give its outlook today at its headquarters in nearby Sunnyvale.

Qualcomm Inc. Chief Executive Officer Paul Jacobs said yesterday that he's stopped hiring and is eliminating some research projects after a ``dramatic'' contraction in orders from mobile-phone makers. San Diego-based Qualcomm is the world's largest maker of mobile-phones chips.

Holiday Season

Technology companies typically get a bigger chunk of annual sales in the fourth quarter, since their products are popular in the holiday shopping season. Intel's revenue in the period grows an average of 8 percent from the third quarter, according to David Wu, an analyst at Global Crown Capital in San Francisco. The lower end of Intel's current forecast range would be a 15 percent sequential decline.

Microsoft, the world's largest software maker, fell as much as 1.5 percent to $20 in early trading. Micron Technology Inc., the largest U.S. producer of computer memory, declined 10 cents, or 3.2 percent, to $3. Applied Materials fell 5 cents to $9.90, while National Semiconductor dropped 16 cents to $11.17.

Semiconductors take as long as three months to go through production lines. The sudden drop in orders may reflect the eagerness of computer makers to avoid being stranded with expensive stockpiles of unused parts. Lean inventory may help chipmakers' earnings improve more quickly after demand rebounds.

Gross Margin

``People have learned you don't hold on to inventory,'' Wu said.

Intel's fourth-quarter gross margin, the percentage of sales left after production costs, will total about 55 percent, ``plus or minus a couple of points.'' The chipmaker had earlier anticipated about 59 percent. The margin is the only measure of profit that Intel forecasts publicly.

Analysts had estimated fourth-quarter profit of 37 cents a share on revenue of $10.4 billion, according to a Bloomberg survey. Intel intends to report full results Jan. 15.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: November 13, 2008 08:42 EST