Intel Corp.
INTC 3.58%
posted a decrease in quarterly earnings as consumers and companies pull back on purchases of personal computers after rushing out to buy them during the pandemic.
The Santa Clara, Calif.-based company profited handsomely from the shift to remote work and learning, which drove a shopping frenzy for desktops and laptops, many using Intel’s chips. PC shipments fell by about 5% in the first quarter, according to estimates from International Data Corp., suggesting that a two-year wave of demand may have crested.
Intel on Thursday said first-quarter sales declined almost 7% to $18.35 billion, missing Wall Street expectations. Intel generated net income of $.8,1 billion.
The division that handles chips for PCs saw sales falling 13% to $9.3 billion.
The company also gave more-muted guidance for sales in the second quarter against a backdrop of slower PC sales and uncertainty caused by the impact of Covid-19 lockdowns in China and Russia’s invasion of Ukraine on broader economic sentiment,
Intel shares closed up around 3.5% on Thursday and fell more than 5% in late trading after posting its quarterly earnings.
The results come during a turbulent period for the semiconductor industry, which has enjoyed booming demand but has struggled to keep pace. Chip companies have also wrestled with a flurry of disruptions and global supply-chain snarls. Dallas-based chip maker
Texas Instruments Inc.
issued a lower-than-expected revenue forecast in its financial results Tuesday because of uncertainty in China and Europe. Mobile-phone chip maker
Qualcomm Inc.
exceeded Wall Street expectations with its results Wednesday.
Despite a chip shortage, which Intel Chief Executive
Pat Gelsinger
has said could last into 2023, industry executives expect annual chip sales globally to double to more than $1 trillion by 2030.
Intel, in addition, is little more than a year into a transformation under Mr. Gelsinger, who took over last year with a mandate to recapture the company’s leading position in chip-manufacturing technology, which it lost years ago to competitors in Asia.
Intel has for decades been America’s most dominant chip maker, commanding a huge market share in chips that power desktops and laptops as well as servers in data centers owned by corporations, governments and internet companies. But Intel has lost some of its gusto in recent years, stumbling in an effort to build smaller and faster chips and allowing contract chip makers in Taiwan and South Korea to surpass it.
Longtime rival
Advanced Micro Devices Inc.,
meanwhile, which designs chips and has them manufactured on contract in Taiwan, has steadily gained market share in recent quarters. It had a 10.7% market share in server chips as of the end of last year, according to Mercury Research, up from 7.1% a year prior. Intel dominates the rest of that market.
Mr. Gelsinger, who spent three decades in an earlier stint at Intel before coming back as its chief executive, has launched a multipronged recovery effort. Since he joined, Intel has announced major new factory projects in Arizona, Ohio and Germany that could cost hundreds of billions of dollars—and is seeking government funding to help. He has reorganized the company’s executive ranks, begun to outsource production of some of its most advanced chips and started a business making chips on contract for others.
Mr. Gelsinger is also preparing for the public listing of the company’s Mobileye self-driving unit, which sells chips and systems to auto makers. The company is planning a listing for the middle of this year that could value Mobileye at above $50 billion, helping fund Mr. Gelsinger’s ambitions, The Wall Street Journal has reported.
Write to Asa Fitch at [email protected]
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