New From Intel for Q3: The Deceleron

So that surge in demand for chips? The one that led Intel (INTC) to report record results last quarter and project continued growth in this one? The one that inspired CEO Paul Otellini to proclaim, “The PC and server segments are healthy and the demand for leading-edge technology will continue to increase for the foreseeable future.”

More of a backwash, really.

This morning, Intel reduced its outlook for the third quarter, citing a softening market for PCs. For Q3, the company now expects revenue of $11 billion, plus or minus $200 million–down from earlier guidance of $11.2 billion to $12 billion.

“Revenue is being affected by weaker than expected demand for consumer PCs in mature markets,” the company said in a statement. “Inventories across the supply chain appear to be in-line with the company’s revised expectations.”