Chipzilla CEO Paul Otellini has admitted that tablet sales are hurting its PC business.

Otellini said in a conference call that "the big question on everyone's mind" how Intel will respond to the new computing category of tablets. He praised Apple for its success with the iPad and said that it had done a wonderful job reinventing the category. But the downside is that tablets will "probably" impact PC sales at the margin.

He said that punters have a limited amount of discretionary income and some will choose to purchase a tablet instead of upgrading an existing PC or purchasing a netbook in any given period. Despite Apple's early gains in the tablet market, Otellini remains confident that Intel can "win this segment because it will take a longer term view."

"In the end, it will be additive to our bottom line, and not take away from it," he said.

He added that Intel is currently working with a number of partners to bring to market tablets running Windows, Android and MeeGo operating systems across a "variety of form factors and price points."