Intel management at its quarterly reporting event began by saying that revenue in the customer area, while down 17% year over year, has consistently grown by 6%.The sales structure of Intel components in this sector changed so that the average selling price increased.The company was able to strengthen its position in the customer segment, and the Intel management is full of confidence that it will be able to do so in the future.Image source: Intel CEO Patrick Gelsinger even let it slip that in the third quarter Intel stepped up work with those of its customers who were willing to accelerate the purchase of the product in light of the upcoming price hikes in the fourth quarter.According to the company's management, this led to the strengthening of Intel's position in the client segment in the third quarter.At the same time, revenue in the segment as a whole fell by 17% year-on-year due to the majority of customers having excess products in stock.If we consider revenue from products for the desktop segment, in the third quarter, Intel's revenue increased by 3.3% year-on-year to $3.22 billion, which for the declining market as a whole is not so bad.In the notebook segment, revenue for the year was down 25.8% to $4.4 billion.As Patrick Gelsinger pointed out, in the PC segment the company has \"fundamentally increased its market share\", and its existing product lines in terms of competitive positioning are very strong.Intel management is not confused by the possibility of a decline in PC sales in the global market to levels below those seen before the pandemic, although they are convinced that this will not happen at all.It's just that so many computers were sold during the pandemic that if they have to be replaced sooner or later with new ones, Intel will definitely get its piece of the pie.According to Gelsinger, Intel's product line is positioned in such a way that it can expect to further increase its market share.Moreover, the sagging demand is more pronounced in the segment of low-cost PCs, and Intel is now focusing on more expensive offerings.As the head of Intel added, Alder Lake and Raptor Lake processors are showing impressive performance, and preparations for the Meteor Lake release next year are in full swing.The recently unveiled Raptor Lake processors do show superiority over existing AMD solutions in terms of performance, according to independent tests.At the same time, Intel products also turn out to be cheaper, so it is easy to explain the confidence of the company's management in the revenge on the consumer market.
The third fiscal quarter is barely over on the calendar of many companies, but that doesn't stop them from summing up the preliminary results of this reporting period.AMD did not wait for full statistics to be published, and this week was forced to admit that revenue fell short of its own expectations by an average of $1 billion, and in the client area, mainly represented by Ryzen processors, and even fell by 40% year on year.Image source: AMD Management said that in the third quarter the company generated no more than $5.6 billion, while its own forecast earlier mentioned a range of $6.5 to $6.9 billion.Profit margin instead of the expected 54% was barely close to 50%.Such statements caused the decline in the company's share price after the end of the trading session by 4.5%.Speaking about the results of the quarter in more detail, CEO Lisa Su (Lisa Su) said that \"the PC market in the past quarter significantly sagged.Even AMD's competitive range of desktop and mobile processors could not overcome the negative macroeconomic trend and customers maintaining substantial inventory of products yet to be sold.Specifically on the customer side, AMD reduced revenue by 53% sequentially and 40% year over year, to $1 billion.In the data center segment (server processors and gas pedals) revenue increased by 8% sequentially and 45% year over year, to $1.8 billion.The Gaming segment (graphics and console chips) was another \"ray of light in a dark realm,\" with core revenues flat quarter over quarter, up 14 percent year over year to $1.6 billion.Finally, the Embedded Solutions business increased revenues by 4 percent sequentially to $1.3 billion, primarily as a result of the Xilinx acquisition completed this year.AMD incidentally had to write down $160 million due to product price adjustments and unrealized product inventory.It is noteworthy that operating expenses in the third quarter even decreased from $1.6 to $1.5 billion against expectations.By the way, overall AMD revenue decreased by 15% only in sequential comparison, in annual terms it increased by a solid 29%, although against the background of the achievements of previous quarters such dynamics and does not seem expressive.
Intel and AMD executives recently not only spoke at industry analyst conferences but also met with them privately.Bernstein experts, for example, spoke with both Intel CFO David Zinsner and AMD server division head Dan McNamara.Both believe that the third quarter was worse than expected, and therefore the results of the whole year may adjust accordingly.Image source: AMDAt least, this forecast is true for the PC market.According to Zinsner, the situation in this market has deteriorated more than the 10 percent reduction laid down in the July forecast relative to the results of 2021.Intel's CFO is not yet ready to give specific figures for the decline, but added that the situation in the server segment has also deteriorated due to weaker demand in China and the difficult macroeconomic environment.AMD representative in his comments to analysts Bernstein made it clear that the PC market is now in turmoil, and customers are showing demand below expectations.Earlier the company had expected the PC market turnover to shrink by 15% for the year, but now there is every chance that the reality will be worse than expected.In spring both companies were counting on the improvement of the PC market in the second half of the year, but now they timidly pin such hopes on the fourth quarter, and only in some areas of activity.AMD, for example, is convinced that the release of new gaming video cards of this brand will contribute to the growth of demand for profile products in the fourth quarter.
In March this year, prices for computers in Russia jumped by 30%, but have now returned to the level of the beginning of the year, and in some items were even lower, Izvestia writes, citing data from MTS and M.Video-Eldorado.The reason for this lies in the strengthening of the ruble, as well as reduced demand for equipment.Image source: PihabayAlthough some market participants predicted that the cost of electronics in Russia will never return to pre-crisis levels, this has already happened with computer equipment.A source in one of the retail networks said that prices are not just dropped - in April-June the average PC price in Russian retail was 62.4 thousand rubles, which is 8% lower compared to the first quarter of 2022.The cost of many laptops returned to the level recorded in early February 2022, and some models have fallen even further, as reported in MTS.M.Video-Eldorado said that the cost of equipment has stabilized and is now at an attractive level.The retailer offers a wide range of equipment, including computer-based, at prices of early 2022.According to the source, strengthening of the ruble is not the only reason for the decrease in computer equipment cost.The fact that the demand for the equipment from the population has dropped significantly plays a major role.According to available data, in the second quarter there were sold 528 thousand computers (notebooks and desktops) for 33 billion rubles in Russia.In terms of sales, it is a 40% drop, and in terms of money - by 45% compared with the first quarter.Image source: IDCDeveloped another source said that the decline in demand affects the scarcity of certain models.For example, in Russia began to bring significantly less gaming laptops.Problems with the range can also be explained by the fact that the importation of products of some vendors, such as HP, have ceased.Difficulties in logistics and cross-border settlements have an additional negative impact.It is noted that in the second quarter, sales of not only computer equipment, but also smartphones decreased.Compared to the first quarter, sales of smartphones fell by 33% in unit terms, and compared with the second quarter of last year - by 30%.This decline is also due to the rush in demand in the first quarter and the resulting shortage of devices.Project Manager of Content Review Sergei Polovnikov believes that low prices for computer equipment will last until the sharp strengthening of the dollar.He also noted that although sales declined in the second quarter, the computer market as a whole is stable.
Comments from Intel representatives at the Bank of America conference were not limited to a discussion of the timing of the Sapphire Rapids server processor ramp-up.New CFO David Zinsner was also in attendance and acknowledged that the macroeconomic difficulties affecting the entire industry will not bypass his company.Component shortages, lockdowns and inflation were named as the main enemies of the dynamic PC market this year.Image source: Intel, Adobe StockThe event was addressed to financial analysts, they instantly drew conclusions from the statements of Intel representatives.SMBC Nikko Securities America experts, for example, took Intel management's lack of intention to revise its revenue forecast for the second quarter as a signal that the impact of Chinese lockdowns would shift to the third quarter and second half of the year as a whole.It was the impact of lockdowns in China that Intel's CFO talked about in the context of the possibility of lower demand for the company's products this year.At the same time, Zinsner did not correct his earnings forecast for the second quarter downward - apparently, the company still expects to receive about $18 billion for the period.However, Intel representatives had to admit that in the near future the company would have to operate in worse circumstances than previously expected.According to Zinsner, macroeconomic events will have an impact on Intel business, as in the case of the majority of corporations outside of the semiconductor market.Specifically for Intel, he explained, three factors will be of key importance, contributing to the decline in revenue.The first is the lack of components, which would allow the company to produce the adequate amount of finished products.The case in point is the shortage of chips that are manufactured by other companies - for example, the same laptop, for sale, if it is equipped with a processor and Intel chipset, but lacks power electronics or some other minor components.The second factor that is obviously holding back revenue growth in the PC segment is the correction of stocks in the warehouses of customers.The latter, in the period of deficit bought more components than they could use in their own products, and now the weakened demand will delay the realization of the existing stocks, and therefore the new purchases of components from Intel partners will start later than planned.As Zinsner admitted, all three factors have shown themselves to be stronger in the current quarter than the company originally expected.The second half of the year seems even more cloudy to Intel management than even a month ago.The Chinese market will recover from the effects of lockdowns slower than expected, although it is unlikely to have a significant impact on the company's business in the second half of the year, according to the CFO.More lockdowns shouldn't be ruled out, either, as Zinsner cautioned.In the long term, Intel still hopes to reach a revenue growth rate of 10-12% per year through 2025 or 2026.Profit margins should rise to 54-58% by the end of the forecast period.Three years from now, Intel's financial flows should normalize after all planned investments are made.
The moderate optimism of major off-the-shelf PC manufacturers, who cited the potential to upgrade their commercial PC fleets this year, was not transmitted to IDC specialists, who claim that the growth period at year-end will be replaced by an 8.2% drop in shipments.Moreover, even this figure may be too optimistic, and therefore closer to the end of the year may be subject to adjustment.Image source: Pixabay, StoksparThe IDC forecasts that this year the industry will not be able to deliver more than 321.2 million personal computers and not more than 158 million tablets.This is 8.2 percent and 6.2 percent less than the previous year's results.The high-base effect, which was shaped by strong demand for PCs at the height of the pandemic, is only partly to blame for this year's negative market dynamics.Continued component supply disruptions, the effects of lockdowns in China, inflation, and the impact of the geopolitical crisis on Europe's eastern frontiers will all contribute to lower demand for PCs and tablets this year.The Chinese market is not only important in itself because of its size, this country produces 95% of computer equipment, so the events in the region have a strong impact on the entire industry.In the short term, even high demand for PCs in the corporate segment will not help to offset the drop in demand in the consumer and educational sector.However, the volume of PC shipments by the end of the year will still be higher than before the pandemic.The sharp decline in shipments this year will result in a negative supply growth rate from 2021 to 2026 in compound percentages: the annual decline will be measured at 0.6% for the PC market and 2.0% for the tablet market.In the latter case, the situation will be exacerbated by competition from smartphones and PCs, which will cause a decline in the popularity of tablets as such.In the medium term, according to IDC, demand for PCs will be driven by Microsoft's decision to stop supporting Windows 10 in 2024.Usually such actions of the software giant provoke an increase in demand for new computers in the corporate sector.Hybrid forms of work will also provide the PC market with stable demand, but inflation and other unfavorable macroeconomic factors will lead to an increase in the life cycle of computers, and upgrading the fleet will be less frequent.
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