- Intel suffers its biggest quarterly loss and expects to remain in the “red numbers” due to the drop in PC sales, which fell to levels not seen in more than 12 years.
- The company has sought to diversify its product line into emerging technologies such as IoT and autonomous vehicles, and its data center group has been one of the strongest.
- Although its client computing division has been the most profitable, Intel faces competition from AMD and Qualcomm.
Intel was affected by the largest quarterly loss in its history and warned that it will remain in the “red numbers” for a long time due to the drop in PC sales.
Indeed, Intel’s sales fell to a level not seen in more than 12 years.
According to Intet’s financial report for the first three months of 2023, the US company billed 11.71 billion dollars, more than analyst estimates, but 35 percent below what it had sold a year earlier.
PC sales in particular, responsible for most of the company’s revenue, fell a whopping 28.5 percent on-year, according to data from International Data Corp.
The phenomenon is simple and related to the coronavirus: in the pandemic, consumers rushed to buy computers, smartphones and other electronic devices driven by the need to get their homes ready to study and work remotely.
Now, when people went back to their pre-covid routines, sales fell. And very hastily.
Another major division for Intel, PC chip sales, was down 37 percent.
According to the CFO, David Zinsner, there is a positive fact: the market is returning to normal from the end of 2022 since the other PC manufacturers, who buy the chips from Intel, are no longer in stock and will return to order .
Pat Gelsinger, president of Intel, also spoke hopefully: “In recent months there has been an improvement situation in the PC market.”
He Intel financial report Q12023 complete.
Is there a crisis at Intel?
Intel Corporation has had a rough decade amid changes to adapt its business model and sales strategies to remain competitive.
Since 2010, Intel has sought to expand beyond its core business of producing microprocessors for personal computers to diversify its product line into emerging technologies such as artificial intelligence, the Internet of Things (IoT), and autonomous vehicles.
One of Intel’s strongest business units is its Data Center Group (DCG), which supplies chips for servers.
This segment has been a significant revenue generator for the company in recent years, contributing nearly 35 percent of total revenue between 2018 and 2022.
In addition, the IoT group has become a promising unit, offering chips and software for connected devices and smart systems.
In terms of profitability, while its client computing division (CCG) has been the best, the problem is with the competition, as Advanced Micro Devices (AMD) and Qualcomm have been gaining ground.
Strategy 2023
Returning to the financial report, the drop in the company’s sales can be seen directly in the benefits, which were negative by 2,760 million dollars in the first quarter of 2023.
It was the second loss in a row for Intel, surpassing what was the second largest so far, when at the end of 2017 it lost 688 million dollars.
For the April-June quarter, Intel expects to sell between $11.5 and $12.5 billion, still well below 2022.
While the data was not good, talk of an improvement in recent months sent the company’s shares up 6.1 percent.
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