Processor maker Intel has cut its quarterly earnings outlook by US$1 billion, as PC makers struggle to overcome the shortage of hard disk drives caused by flooding in Thailand.

The company is predicting its fourth-quarter revenue will be US$13.7 billion plus or minus US$300 million, compared with the previous estimate of US$14.7 billion plus or minus US$500 million.

"Sales of personal computer are expected to be up sequentially in the fourth quarter,” Intel says in a statement.

"However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages.”

Thailand is the world’s number two exporter of hard drives, but many factories have been shut down since the severe flooding which hit in July, causing hundreds of deaths.

Intel doesn’t expect a recovery in hard drive supply until the second quarter of 2012; in the meantime, computer buyers can expect prices to keep rising.