Intel Corporation issued a lower-than-expected forecast for its fiscal second quarter, citing further chip shortages due to the widening COVID-19 curbs in China.
The chipmaker projects a current-quarter adjusted profit of $0.70 per share, below analysts’ average estimate of $0.83. Eventually, its forecasted revenue was $18.00 billion, missing the market consensus of $18.38 billion.
As lockdowns in Beijing continue, the semiconductor company anticipated supply-chain bottlenecks to hurt its customers. This conflict would in turn affect the chip maker’s business.
The California-based firm anticipated that the industry would continue to see challenges until 2024. In addition, it noted that the weighing macroeconomic factors would affect areas like capacity and tool availability. In line with this, Intel signals lower PC demand as consumers spend away from gadgets.
Subsequently, revenue at the business’s Client Computing Group, which supplies PC makers, skidded 13.00% year-over-year to $9.30 billion. This segment is notably the most significant contributor to the company’s revenue.
At the same time, research firm Gartner noted that global PC shipments fell 6.80% during the quarter.
Analysts also mentioned that the PC market came off from the searing growth rates over the last two years. The sector highly benefited from the high demand at the onset of the pandemic amid the shift to remote work.
Moreover, the decline in the sales of Intel chips reflects the impact of Apple Inc.’s transition to its own PC processors.
Meanwhile, the chipmaker lifted its adjusted earnings guidance for the full fiscal year. It increased its prior estimate by 0.10 cents to $3.60 per share on $76.00 billion in revenue. It edged up from the anticipated $3.50 per share and $75.78 billion in sales.
Intel Beats Q1 Top and Bottom Lines
Intel surpassed the top and bottom lines for the first quarter, but the weak quarterly guidance overshadowed its results. In the latest earnings results, the company posted an EPS of $0.87 per share, outpacing the projected $0.81.
Likewise, revenue came in at $18.35 billion, well above the $18.31 billion expected by market participants. Nevertheless, the metric represented an annual decrease of 7.00%.
Furthermore, the firm currently faces increasing competition in the data center space. Its rivals Nvidia Corp. and Advanced Micro Devices, ramped up their chip production to cater to the booming market. The sector foresees potential growth in the metaverse, AI applications, and cloud computing.
Accordingly, Intel shares dropped 3.91% or 1.83 points to $45.01 per share during Thursday’s extended trading.