Intel Corp lowered its forecast for profits and annual sales after a decline in demand for PCs. This is the 2nd quarter since the company has failed to reach its estimates. According to experts, this decline can be attributed to the lower demand for chips in computers. Overall, the stock of Intel dropped by 10%, which is worrying for both the investors and the company.
For the current quarter, Intel's forecast is also below the expectations set by the experts. According to the company, the sudden drop in economic activity and declining demand for personal computers is at the root of this problem.
People Are Spending Less On PCs
But what's causing people to spend less money on new PCs or on the upgradation of existing ones? It can be attributed to runaway inflation which has disturbed the budget of companies and even individuals. On top of that, the lockdown also curbed the demand for new PCs in the offices and schools as people were working from home.
Overall, chipmakers have been facing increased pressure due to the COVID-19 restrictions in China. On top of that, the Russia-Ukraine war has disturbed the supply chain while dragging the demand even further.
According to an IT research firm, the global shipments of personal computers will drop by around 9.5% for the year.
According to Pat Gelsinger (Chief Executive of Intel), the current economic condition has changed the consumption of PCs in the marketplace. Furthermore, the inventory situation of major customers has also dramatically changed.
All of these factors have introduced a new shift in the business, which resulted in execution problems.
For the fiscal year 2022, Intel's revenue is expected to be around $65 - 69$ billion. Earlier, the company was forecasting a number of $76 billion.
Earlier, the adjusted profit was expected to be $3.60 per share - This figure is also changed down to $2.30 per share only.