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Intel headquarters in Santa Clara, California.
David Paul Morris/Bloomberg
So much for the comeback in the second half. The two major computer chip companies now acknowledge that PC demand is fading beyond their already disappointing outlook.
On Monday, Bernstein analyst Stacy Rasgon released a report after meeting with senior executives at
Intel
(ticker:
INTC
) i
Advanced microdevices
(
AMD
) last week. The main result is that the PC market is “getting worse”.
AMD and Intel use the x86 chip architecture to manufacture the processors that act as the main computing brains for PCs and servers.
For Intel, the company’s CFO David Zinsner told Rasgon that the PC market has “deteriorated more” than the “10% drop” [versus 2021]” the company’s annual PC market guidance in July. The executive did not provide a revised outlook. Zinsner said the data center market has weakened due to softer sales in China and a more challenging macro environment.
The analyst also met with AMD’s Dan McNamara, the head of the chipmaker’s enterprise server unit. The AMD executive revealed that the current PC environment is “messy” and that the outlook for customers is weaker than expected. AMD said the PC market is trending worse than the company’s previous PC market outlook of a drop in the percentage of “mid-teens” compared to the previous year.
Rasgon underperforms Intel stock with a price target of $30. He rates AMD stock at Outperform with a price target of $135.
In Monday trading, Intel shares fell 0.8% to $29.00, while AMD shares fell 0.3% to $76.28.
In April, Intel projected a rebound in the PC market for the second half of this year. But business conditions have only worsened in the following months. Worldwide shipments of personal computers fell 15% in the June quarter from a year earlier, according to IDC. Intel and AMD then lowered their full-year 2022 PC market forecasts when they reported their second-quarter earnings.
But now both companies say the global PC market is even worse than their lowered expectations. This does not bode well for their future results.
Write to Tae Kim at tae.kim@barrons.com
