chip maker intel on Thursday forecast revenue and profit for the second quarter below Wall Street expectations, due to weak demand in the personal computer market and uncertainty in the supply chain due to lockdowns due to covid-19 in China.
Shares of the company fell 5% in after-hours trading.
Rising inflation, the resurgence of Covid-19 in China, and the uncertainty surrounding the ukrainian war they have pushed down consumer spending on technology, hurting Intel, which last year saw more than half of its revenue come from the sale of PC processors.
Analysts say the PC market is emerging from breakneck growth rates in the past two years as remote work and learning fueled demand during the pandemic.
As China’s lockdowns continue, supply-chain bottlenecks are likely to hurt Intel’s customers, in turn hurting the chipmaker’s business.
The company expects adjusted profit for the current quarter of 70 cents per share and revenue of about $18 billion, below analysts’ average estimate of 83 cents per share and $18.38 billion, according to IBES data from Refinitiv. .
Intel is also an increasingly strong competitor in data centers, as Nvidia and Advanced Micro Devices are ramping up their chip production to serve the booming market amid growth in the metaverse, AI applications, and cloud computing. .
Revenue from Intel’s higher-margin AI and data center business rose 22% to $6.0 billion, versus analyst estimates of $6.77 billion.
Meanwhile, first-quarter adjusted revenue was $18.4 billion, versus analysts’ average estimate of $18.31 billion.
On an adjusted basis, Intel earned 87 cents per share, above expectations of 81 cents.