As lockdowns in China continue, supply-chain bottlenecks are
likely to hurt Intel’s customers, in turn affecting the
chipmaker’s business.
As lockdowns in China continue, supply-chain bottlenecks are
likely to hurt Intel’s customers, in turn affecting the
chipmaker’s business.
Chipmaker Intel Corp forecast
second-quarter revenue and profit below Wall Street expectations
on Thursday on worries of weak demand in its largest end market,
PCs, and increased supply-chain uncertainty due to COVID-19lockdowns in China.
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Shares of the company fell 5% in after-market trading.
Rising inflation, resurgence of COVID-19 in China and
uncertainties around the war in Ukraine have shifted consumer
spending away from gadgets, hurting Intel. More than half of its
revenue last year came from the segment selling processors for
PCs.
“We are expecting that Shanghai does open up fairly soon,
but that does moderate our outlook a little bit on Q2,” IntelCEO Pat Gelsinger told Reuters. “It doesn’t change
any perspective on the year, which we think as we go into the
second half, you have more PC demand.”
The first quarter beats help Intel meet its full-year
revenue outlook, he added.
As lockdowns in China continue, supply-chain bottlenecks are
likely to hurt Intel’s customers, in turn affecting the
chipmaker’s business.
“We think Intel still has to prove they can meet guidance
targets before the stock receives full credit for a strong
guide,” said Logan Purk, analyst at Edward Jones.
Analysts say the PC market is coming off of searing rates of
growth over the last two years as remote working and learning
triggered high demand during the pandemic.
Revenue at Intel’s Client Computing Group, which supplies PC
makers and is the largest contributor to the company’s revenue,
fell 13% to $9.3 billion in the first quarter.
The company expects current-quarter adjusted profit of 70
cents per share on revenue of about $18 billion, below analysts’
average estimate of 83 cents per share on $18.38 billion,
according to IBES data from Refinitiv.
Intel is also facing increasing competition in the data
center space, as peers Nvidia Corp and Advanced Micro
Devices are ramping up their chip production to cater to
the booming market amid growth in the metaverse, AI applications
and cloud computing.
Revenue from Intel’s higher-margin data center and AI
business rose 22% to $6 billion in the reported quarter, while
analysts on average had expected $6.77 billion.
However, adjusted revenue for the first quarter was $18.4
billion, compared with analysts’ average estimate of $18.31
billion.
On an adjusted basis, Intel earned 87 cents per share, above
expectations of 81 cents.
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