So far, PC vendors are content to build machines with what they have on their own shelves. The shortage will continue due to tension on transport and production in China due to the worsening of the Covid.
Inflationary pressures, component concerns and falling demand drove Intel’s PC chip business down 13% from a year ago, a black spot in the results of the first quarter of 2022, otherwise excellent. This group, the Client Computing Group (CCG), recorded a turnover of 9.3 billion dollars, a decrease of 13%. Overall, Intel reported net income of $8.1 billion, a whopping 141% increase over the prior year. Revenue, however, fell 7% to $18.4 billion. Declining revenue from GCC, Intel’s largest business segment, hurt its entire business. Intel’s Datacenter and AI Group, its second-largest business, saw revenue rise 22% to $6 billion. Intel’s Network and Edge Group (NEX) also saw revenue growth of 23% to $2.2 billion, and its other groups also grew.
“In our PC business, we continue to see strong commercial demand, offset by a slowdown in entry-level, consumer and education, as well as the impact of the halt in customer shipments in Russia and Belarus,” said David Zinsner, Intel’s chief financial officer, appointed last January. Additionally, component supply constraints continue to be an issue; the recent Covid lockdowns in Shanghai are further increasing supply chain tensions and contributing to inflationary pressures which are negatively impacting the TAM [Total Available Market] PCs for the year. “As a result, we are seeing assemblers continue to reduce inventory levels to better meet demand and align with other system components. We expect some elements of this inventory reduction to continue over the course of the [deuxième trimestre] and subside during the second half of the year”.
Difficulties until 2024
Pat Gelsinger, CEO of Intel, said that while he believes the industry is at the start of a long-term growth cycle for all semiconductors, Intel sees some limitations in the matched-set in areas like Ethernet are a downturn in the consumer PC market. (Matched set has become an industry term for not being able to buy a PC if there is a shortage of a critical component to make up a set of components, which prevents delivery of those PCs). The chip shortage cost the US economy $240 billion last year, and we believe the industry will continue to struggle through at least 2024 in the areas of foundry capacity and availability. tools,” Mr. Gelsinger continued.
Chinese cities, including Shenzhen and Shanghai, have been locked down due to the resurgence of Covid. Microsoft, like Intel, has begun to warn of further supply chain malfunctions as manufacturing slows or comes to a halt. However, some major component consumers have been stocking up, including PC vendors, who apparently choose in some cases to build PCs based on what’s in their own warehouses. Although Intel believes customers will start buying components in the second quarter and again in the second half, executives have been cautious about its future.
The Covid still has an impact on the supply chain
The Santa Clara founder predicted second-quarter revenue would drop to around $18 billion and earnings per share would drop from a whopping $1.98 to just $0.50, indicating that revenue and profits could fall. This forecast was based on the impact of an additional 14th week for closures in Shanghai. Zinsner also said Intel plans to manage the inflationary environment by reducing its own production costs and also raising prices for certain products for businesses. He did not specify where Intel would raise its prices. We estimate the impact will be relatively limited assuming these restrictions come to an end, Zinsner said. Even in the event of a short-term lockdown, we anticipate that it will take some time for the supply chain to normalize. And if the lockdowns persist, or extend beyond Shanghai, we could see a bigger impact on our outlook.
Intel said it has shipped more than 15 million Core 12th Gen Alder Lake chips, with more than 250 models planned for this year. The founder is shipping samples of Raptor Lake, its latest processor, to assemblers and still plans to follow it with the Meteor Lake generation in 2023, as its previous processor roadmap indicated. Intel continues to make great strides in its plans to ship products manufactured in five-block mode four years from now, Gelsinger said. The CEO pointed out that PCs from Acer, Asus, Dell, HP, Lenovo, Samsung and others will use the first Alchemist GPUs he shipped earlier this year, which are part of the Arc 3 commercial line. Even more powerful designs – Arc 5 and Arc 7 – will ship later this year, he said.
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Intel warns of China lockdown shortages Computerworld
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