Canaccord Genuity sees risk of inventory correction for Intel Corp. (NASDAQ:INTC) in the first quarter as the shortage of hard disk drives (HDD) is driving higher CPU inventories.  

Recent checks indicate Intel's customers are experiencing CPU inventory growth in Q4 as a result of HDD shortages. Tier-2 customer inventories appear to be growing the most and now stand around six to seven weeks, versus their normal four weeks, analyst Bobby Burleson wrote in a note to clients.

Tier-1 customers are also seeing inventories grow to about 1.5 weeks above normal. The analyst expects shortages could constrain PC production by more than 20 percent in the fourth quarter and are likely to worsen in the first quarter, constraining production by as much as 40 percent.

This disruption comes at a time of increasing uncertainty for PC demand. The tablet challenge is escalating with the success of Amazon's Fire tablet and looming refreshes from Apple and Amazon in early 2012 while appetite for ultrabooks in H1/12 may be undermined by high platform costs.

The analyst has a hold rating and $24 price target on Intel stock, which closed Tuesday's regular trading session at $25.38.