AMD follows Intel in warning that the PC market is collapsing

The hot PC market is slowing rapidly after surging during the COVID-19 pandemic, and strong chip players AMD and Intel are feeling the financial pain.

“We’ve taken a more conservative view of the PC business,” AMD CEO Dr. Lisa Su said in an earnings call late Tuesday. “So, a quarter of a year ago, we thought PCs would crash, let’s call them high single digits. [percentage]. And our current view of the PC business is that it will decline, let’s call it mid-adolescence [percentage]. “

Weakness in PCs has led AMD to forecast a rare, worse-than-expected third quarter despite its appreciation of continued strength in data center chip sales. AMD expects third-quarter sales in the $6.5 billion to $6.9 billion range. The Street forecast sales of $6.8 billion. AMD expected third-quarter gross profit margin to be 54%, which is slightly lower than the estimate of 54.2%.

AMD stock fell more than 2% in early trading on Wednesday. The company had the most visited index page on Yahoo Finance, confirming investor concern about AMD’s outlook, which also included a warning that pressure on the PC market will continue into the fourth quarter.

A man checks power lines on the motherboard of a laptop computer at a repair center in Colombo, Sri Lanka, October 17, 2017. REUTERS/Dinuka Lyanawat

AMD’s warning comes after rival Intel, Intel, previously told investors that it expects the overall PC market to fall 10% this year amid a shock second-quarter profit loss and lower full-year earnings guidance.

“We’ve seen significant stock corrections from our customers,” Intel CEO Pat Gelsinger said on Yahoo Finance Live.

Gelsinger said he thinks the third quarter is the lowest for his business, with improved trends in the fourth quarter as holiday PCs are bought.

Intel stock fell 8% on Friday following the disappointments.

The stark comments from the two chip giants shed more light on what has been a challenging environment for PC makers and their suppliers. Cutting back on PC spending also raises the risk of lackluster quarters and expectations from PC makers Dell and HP when they report in the coming weeks.

Global shipments of traditional PCs fell 15.3% year-on-year to 71.3 million units in the second quarter, according to data from IDC. This marks the second consecutive quarter of declining PC shipments after two years of growth.

Correcting the stock of computers can [continue] For several quarters, in our view, given high PC supply chain inventory levels for more than 20 years,” Baird analyst Tristan Gerra wrote in a note to clients. Underutilization rates that challenge gross margin recovery.”

Brian Suzy It is a comprehensive editor and Announcer at Yahoo Finance. Follow Suzy on Twitter Tweet embed and on LinkedIn.

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