As a result of Intel missing predictions for its second-quarter results and lowering its annual sales and profit forecasts on Thursday, the company’s shares fell by ten per cent. Intel has been experiencing a slowdown in demand for its processors, which are used in personal computers. The firm also issued a prediction for the current quarter that predicted earnings that were significantly lower than expected. They attributed this to the “sudden and abrupt decrease” in economic activity as well as challenges with execution.
People are spending less money on personal computers as a result of runaway inflation and the reopening of workplaces and schools. During lockdowns, when many people bought computers for work and school because they stayed home during the epidemic, people spent more money on personal computers.
Chip manufacturers are also under pressure from a slew of COVID bans in important PC market China as well as the war in Ukraine, both of which have worsened supply-chain snarls and lowered demand even further. According to Gartner, an IT research group, it is anticipated that there will be a reduction of 9.5% in the global shipments of personal computers this year.
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Pat Gelsinger, the Chief Executive Officer of Intel, was quoted by Reuters as saying, “The economic transition was harsher and generated not only consumption shifts in the marketplace but also major moves in the inventory position of important clients.” [citation needed]
“As a result of those factors, the business underwent a pretty dramatic transformation, and we did not execute especially effectively.”
When compared to its former expectation of $76 billion, Intel’s current revenue projection for the fiscal year 2022 is somewhere between $65 billion and $68 billion, which is about Rs. 5,20,000 crore to Rs. 5,40,000 crore (roughly Rs. 6,00,000 crore). In addition, it projected an adjusted profit of $2.30 (about Rs. 200) per share, which was a decrease from its previous expectation of $3.60 (approximately Rs. 285) per share.
Gelsinger told Reuters that despite the challenging environment, Intel has no plans to postpone its twenty billion dollars (about one billion and fifty-two hundred and seventy crore rupees) investment in a new mega chip facility in Ohio. According to Gelsinger, “You just don’t construct factories like this based on a few quarter cycles.” [Citation needed] “Over the next decade, the semiconductor business is expected to double, and to capitalise on this potential, I need capacity.”
While Intel suffered a significant setback as a result of the most recent economic crisis, the company’s rivals fared far better. Taiwan Semiconductor Manufacturing Ltd. and Samsung Electronics Ltd., both of which had greater sales growth in the preceding quarter despite issuing a cautionary statement regarding a slowdown in demand for personal computers and smartphones.
TSMC increased its sales projection for the whole year after projecting that the current quarter’s revenues if delivered, maybe the company’s greatest in the last 10 quarters.
Despite the strong growth that analysts anticipate for the overall data centre market, Intel reported that sales from its Datacenter and AI Group (DCAI) decreased by 16 per cent to $4.6 billion (approximately Rs. 36,000 crores). This result was lower than the analysts’ target of $6.46 billion (approximately Rs. 51,000 crores).
According to analyst Ryan Reith of market intelligence firm IDC, “Intel is heavily dependent on the PC business, as well as data centres, and OEMs have halted orders for 2H22.” [Citation needed] [Citation needed] “Peers Samsung and TSMC have significantly more widespread penetration into the mobile, car, and other markets…”
According to Refinitiv, Intel forecast current-quarter revenue in the range of $15 billion (approximately Rs. 1,20,000 crore) to $16 billion (approximately Rs. 1,27,000 crore), which is also lower than the average estimate of $18.62 billion (approximately Rs. 1,48,000 crore). About half of Intel’s revenue comes from the sale of the chips that are used in desktop computers and laptops.
Sales at Intel’s Client Computing Group (CCG), which supplies PC makers and is the largest contributor to the company’s revenue, fell by 25 per cent to $7.7 billion (approximately Rs. 61,000 crores) in the reporting quarter. This is roughly equivalent to the amount that the company made in India during the same period. It is anticipated that worldwide shipments of personal computers would fall by 9.5% this year, as stated by the IT research firm Gartner.
Intel’s revenue fell by 22 per cent to $15.3 billion (about Rs. 1,20,000 crore), marking the company’s sixth consecutive quarter of declining sales. These results came in far lower than analysts’ predictions of $17.92 billion (roughly Rs. 1,42,000 crore).
