[New post] “People aren’t buying as many PCs — and Intel is feeling the multibillion-dollar burn” by Sean Hollister
jaydiaz2013 posted: " Photo by Amelia Holowaty Krales / The Verge The COVID-19 pandemic made personal computers more important than ever, and sales exploded two years in a row. But the good times for PC and chip makers now seem to be fading fast. Last q" Technopreneurph
The COVID-19 pandemic made personal computers more important than ever, and sales exploded two years in a row. But the good times for PC and chip makers now seem to be fading fast. Last quarter's slump in Chromebook sales has made way for an even bigger decline that's hitting Windows manufacturers as well, and today, chip maker Intel has revealed a 25 percent decline in consumer chip sales. It says that a "near-term cyclical slowdown" is shrinking the total market for PCs by approximately 10 percent this year.
Earlier this month, Gartner reported that the global PC market had already declined 12.6 percent compared to last year. And today, Apple reported a roughly 10 percent decline in its Mac sales as well.
Back to Intel: overall, the company's reporting a 22 percent revenue decline to $15.3 billion for Q2 2022, and its profits actually went negative — it lost half a billion dollars this quarter. That's a 109 percent decline in profit from the $5.1 billion it had in Q2 2021.
Intel's losses aren't all from declining sales, though. In fact, the company's slide deck shows it lost half a billion dollars (operating loss) just to launch its underwhelming first-generation GPUs and another $155 million to ramp up its foundry services that's seeing the company ink deals to produce chips for other companies including Qualcomm and MediaTek. Building chips for other companies is something the company historically hadn't done before but is part of its new plan under CEO Pat Gelsinger.
Rough earnings aside, Intel had a major win for that new strategy today: Congress just passed the CHIPS Act that will approve $52 billion in funding for companies to manufacture chips in the US, and it's thought that a substantial chunk of that money will go to Intel. It seems exceedingly unlikely that the funding will actually fix the chip shortage or make the US a chip manufacturing powerhouse like its rivals in Asia, but Intel has promised (and temporarily withheld) factories and jobs based on that money.
We'll be on the Intel earnings call shortly and will add additional context if Intel says anything intriguing.
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