Intel Reduces Sales for the Year and Profit Forecasts Despite lower PC demand

Intel suffered a significant blow due to the recent downturn however, its rivals fared much better.

Intel cut its profit and sales estimates on Thursday after missing expectations for results for the second quarter, due to the fact that the demand for its chips in personal computers slows down and shares plunged 10. The company also projected the current quarter’s results to be below expectations, and blamed for the “sudden and rapid drop” of economic growth as well as problems with execution.

Inflation has exploded and the opening of offices and schools has led people to pay less for computers that they used to during lockdowns which saw many purchase computers to work and for school while they stayed at home during the outbreak.

Chipmakers are also suffering due to a series of COVID restrictions in important PC markets China as well as the Ukraine conflict, which have exacerbated supply chain snarls and increased demand. The global PC market is forecast to decrease by 9.5 percent in the coming year according to analysis firm Gartner.

“The economic shift was more severe and caused not only consumer changes in the market as well as dramatic shifts in the inventory levels of the most important customers,” Intel Chief Executive Pat Gelsinger told Reuters.

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“Those results caused a dramatic shift in the company, which we did not do particularly well in our execution.”

Intel is now predicting fiscal 2022 earnings in the range of $65-$68 billion (roughly 520,000 crore or Rs. 5,20,000 crore) and $68 billion (roughly approximately Rs. 5,40,000 crore) in comparison to the previous estimate for $76 billion (roughly around Rs. 6,00,000 crore). It also predicted adjusted profit of $2.30 (roughly 200 rupees). 200) per share. This is down from the previous forecast of $3.60 (roughly around Rs. 285) per share.

However, Intel will not delay its $20 billion (roughly the equivalent of. 1.52,700 crore) investment in a massive chip factory in Ohio due to this more challenging time frame, Gelsinger told Reuters. “You do not build factories like this on a few quarterly cycles” stated Gelsinger. “The sector of semiconductors is growing by a third over the next 10 years and I’m looking for the capacity to capitalize on the potential.”

While Intel was hit hard due to the recent recession, its competitors did better. Taiwan Semiconductor Manufacturing Ltd and Samsung Electronics Ltd which, while announcing about a slowdown in smartphone and PC demand, also saw higher sales growth in the past quarter.

TSMC forecasts that its current quarter sales, if it is achieved, will be the most successful in the past 10 quarters. TSMC also increased its full-year sales estimate.

Intel announced that its the sales of its Datacenter as well as AI Group (DCAI) fell 16 percent to $4.6 billion (roughly 36,000 crore in rupees). 36,000 crore) and was less than analysts’ expectations for $6.46 billion (roughly around Rs. 51,000 crore) despite the strong growth that analysts anticipate for the datacenter market overall.

“Intel is heavily dependent upon the PC industry and OEMs, as well as data centers. Both have cut back orders for 2H22” analysts Ryan Reith of market intelligence firm IDC. “Peers Samsung and TSMC have greater exposure to auto, mobile, etc. …”

Intel Its business, which earns around 50% of its revenue from the sale of the chips which power laptops and desktops It also predicts the current quarter’s revenue of between $15 billion (roughly 1,20,000 crore). 120,000 crore) to $16 billion (roughly around Rs. 1,27,000 crore) which is also less than the average estimate that range from $18.62 billion (roughly around Rs. 1,48,000 crore) as per Refinitiv.

In the last quarter of the year the sales of the Intel Client Computing Group (CCG) that supplies PC manufacturers and serves as the most significant supplier of the company’s revenue dropped 25, percent, in the quarter to $7.7 billion (roughly about Rs. 61,000 crore) during the reported quarter. According to research firm Gartner Global shipments of PCs are projected to fall 9.5percent in the coming year.

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Intel’s revenue fell by 22% from $15.3 billion (roughly around Rs. 1,20,000 crore) seven consecutive quarter of decline. The results far below estimates at $17.92 billion (roughly about Rs. 1,42,000 crore).

In an adjusted manner the company earned an average of 29 cents for each share, which was less than the expectations of 70 cents.

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