Η Intel says that demand for PCs has fallen to the point where PC makers are drastically reducing inventory levels of their products, leading to a drop in orders for the company's processors
Η caused a decrease in demand Intel revenue down 22%, compared to last year, in the second quarter. In addition, the company failed to make a profit during this period resulting in a note $500 million loss.
"Importantly, the number of PCs we shipped in the second quarter is less than we built, as some of our largest customers are reducing their inventory levels at a rate not seen in the last decade," said the company's CEO. Pat Gelsinger during a conference call to present the financial results of the second quarter.
According to Intel's estimates, the total addressable PC market is expected to shrink by 10% this year. The gelsinger stated that there is “widening consumer weakness” in the product market, although the company still believes there will be demand for PCs in the business space.
This is a huge turnaround from 2020 and 2021, when the PC market saw increased demand due to the pandemic of COVID-19, triggering the need to work and study at home. This caused PC shipment levels to reach a level not seen in a decade.
Η Intel blames the disappointing economic performance on the ongoing economic downturn at a time when consumers are also facing high inflation. Fears of a recession and weakening demand are prompting computer vendors to reduce inventory levels to save costs.
Ο Intel CFO David Zinsner, said another factor was “worse-than-expected drop in demand due to COVID and supply disruption in China". However, he expects Intel's revenue to rise in the coming months as PC vendors continue chip orders to replenish their inventories.
"We feel like we are at the bottom of profits", said o Zinsner. "We have a good set of products coming in the second half of the year." One of these products will be the upcoming ones 13th “Raptor Lake” processors generation of Intel, which will probably arrive around October.
In addition, Intel plans to raise the prices of its chips.
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