AMD expects PC sales to drop dramatically due to decreased consumer demand | Tech Rasta


advanced micro devices Inc.

AMD -0.67%

It issued a downturn in sales for the current quarter and said it would cut spending as the chipmaker responded to a sharp drop in consumer demand.

AMD Chief Executive Lisa Su said the company is cutting costs on non-operating businesses to adapt to weak demand trends. She did not specify the amount of the phone cut with analysts on Tuesday after the company released third-quarter results.

AMD said it expects revenue of about $5.5 billion in the current quarter, up 14 percent but below analyst expectations in its FactSet survey.

The poor outlook reflects a challenging market for PCs with chips in them. And according to last month’s warning for the third quarter, when Intel’s rival AMD Corp.

INTC -0.46%

Tell investors the market is falling faster than expected. and reduced revenue guidance Ms. Su said the PC market could drop nearly 20% this year.

The company expects global economic weakness to affect businesses that supply chips for servers entering data centers. The business is a strength for AMD, partly driven by demand from the fast-growing North American cloud computing company. But Ms Su said buyers of on-premises servers are more cautious in building their computing infrastructure.

“We’ve seen that customers take longer to make decisions. and perhaps more cautious” in capital expenditures, she said.

AMD reported third-quarter results on Tuesday. This includes sales of $5.6 billion. which is consistent with the aforementioned warning. The company had net income of $66 million, down 93% from the previous year. to reflect accounting changes from recent acquisitions and higher R&D spending.

The uncertain outlook for the fourth quarter comes as many tech companies have been hit by slowing consumer spending. higher interest rates and rising inflation This shift was driven by a long-standing growing demand for technology. Amid the shift to remote learning and working at the start of the Covid-19 pandemic

Last week, Intel said it was seriously cutting costs to deal with the downturn. including targeted termination The company reported a 20% drop in third-quarter sales and forecast lower fourth-quarter revenue.

Microsoft Corp.

Amazon.com Inc.,

Google’s main character Inc.

and Facebook’s main Meta platform. Inc.

All gave a much worse-than-expected outlook last week, though. Inc.

Global smartphone sales have declined this year. It reported record third-quarter revenue.

Tech companies are hit hardest on many fronts. The most sensitive to consumer demand are PCs for AMD and Intel. Sales in the AMD division, which includes PC chips, dropped 40 percent to $1 billion in the third quarter. But the data center division, which has server chips, rose 45 percent to $1.6 billion. which was close to what analysts had expected.

Company Gaming Division—AMD Chip sales that went into popular video game consoles and for PC games—up 14% to $1.6 billion in revenue.

AMD’s stock rose more than 4% in aftermarket trading after revealing tighter belts.

Although AMD and Intel have struggled in the past quarter. But other chip manufacturers For example, companies that cater to the automotive industry still experience less demand for more advanced chips. This has led to shortages and production delays for the world’s leading automaker, Toyota Motor. Corp.

It lowered its production targets on Tuesday, citing problems with the chip.

US chip maker Texas Instruments Inc.

and On Semiconductor Corp.

which has a large automotive business The pair said recently that market demand remains strong. Although there are new signs of weakness in some of the chips being sold for industrial use, Dutch chipmaker NXP Semiconductors NV, which accounts for about half of its revenues, comes from the automotive industry. It said on Monday that supply was limited and demand resilient despite economic uncertainty.

As they face the wind in the consumer-electronics market. Some chipmakers, including AMD, are facing new measures in the US. in contact with China Some of AMD’s most advanced chips aimed at artificial intelligence computing require a license from the Ministry of Commerce to be sold in China. Ms Su said on Tuesday that the restrictions would have little impact on earnings in the near term.

Write to Asa Fitch at asa.fitch@wsj.com.

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