January 26 (Reuters) – Intel Corp (INTC.O) .
The company’s shares fell 9.5% in trading after the bell.
“We stumbled. We lost share, we lost momentum.He said Intel was losing market share in the data center market, nodding to the strength of his rival Advanced Micro Devices. (AMD.O)
Two of Intel’s most important markets are showing weakness after two years of strong growth as remote work surged during the pandemic. The PC industry is currently suffering from a chip oversupply after demand for consumer electronics plummeted off the cliff, prompting business customers to slow data center spending on fears of a recession.
Gelsinger told Reuters that customers are also emptying their inventory.
“We expect some of the biggest destockings the industry has ever seen to happen, literally, and that’s impacting our Q1 guide in a meaningful way,” he said. Told.
CCS Insight analyst Wayne Lam said: “Don’t think INTC has hit bottom…they aren’t running a sustainable business model.”
Intel expects margins to decline further after declining from 58.4% in Q4 2020 to 43.8% in Q4 2022. ‘ said CFRA Research analyst Angelo Zino.
Intel has repeated its medium-term goals of 51-53% gross margin and 54-58% long-term target.
Shares of other microchip companies fell as well, with AMD down 2.6% and Nvidia Corp down. (NVDA.O) 2% less.
Data from research firm IDC shows that PC shipments will fall 16.5% to 292.3 million units in 2022, forcing chip makers to cut production and slash revenue forecasts.
Shrinking PC demand also put pressure on Microsoft Corp’s results. (MSFT.O) The Personal Computing segment, which includes Windows, Devices and Search revenue, increased, and this segment declined 19% in the second quarter.
Meanwhile, the data center market is also slowing from double-digit growth as companies cut costs to weather the economic slowdown.
After Gelsinger returned to the company about two years ago, Intel has focused on regaining its lead in chip manufacturing technology. Outsourcing the chip-making process has allowed rivals such as AMD to build much smaller and faster chips, overtaking Intel’s technology.
The company expects first quarter revenue to be in the range of approximately $10.5 billion to $11.5 billion. Analysts on average expected total revenue of $13.93 billion, according to Refinitiv data.
The company expects an adjusted loss of 15 cents per share against an earnings forecast of 24 cents per share.
Revenue in the fourth quarter was down 32% to $14 billion. Average analyst earnings forecast is $14.46 billion.
Reported by Chavi Mehta, Bangalore. Edited by Sriraj Kalluvila and David Gregorio
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