AMD has reported a drop in revenue of 9% compared to the same period last year. The biggest decline was seen in the client group, which includes sales from PC processors. Despite reporting “better-than-expected” revenue and earnings for the first quarter, the company’s stock dropped 6% in extended trading on Tuesday after the chipmaker issued guidance for the current period that trailed analysts’ estimates.
Last Thursday, AMD’s primary competitor, Intel, reported a steep decline in earnings per share and revenue in its first-quarter results. The company took a heavy hit, with earnings per share dropping 133% compared to the previous year, and revenue plummeting almost 36% to $11.7 billion.
This decline in revenue of chip sales comes at a time when the PC industry is in a deep slump, with shipments dropping 30% in the first quarter.
Needless to say, consumer demand plays a crucial role in shaping the industry’s growth trajectory. The demand for Traditional PC has been decreasing due to the rise of mobile devices and cloud computing services.
Talking about the recent times, it seems like the PC industry is having a bit of an identity crisis. The infamous chip crisis, coupled with a gloomy macro-economic climate, has left the industry in a tough spot. The first half of 2022 saw PC inventory levels skyrocket, causing serious supply chain issues and bottlenecking the entire market. And to add insult to injury, the high demand and supply chain disruptions of 2021 quickly transformed into a sudden excess of supply once demand significantly slowed. It’s almost as if the industry is going through a classic “love-hate” relationship with PCs at the moment.
AMD’s CEO, Dr. Lisa Su, has signaled that the company sees growth in the second half of the year as the PC and server markets strengthen. As she puts it, “We believe the first quarter was the bottom for our client processor business.”
