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PC chip plunge wipes out a quarter of Intel’s value

Chips1 min read

Intel's stock fell by almost a quarter after the chipmaker reported weak sales of PC processors, even though its data center business grew fast. The CEO says demand for server chips (CPUs) will boom, but Intel may struggle to make enough of them.

What happened

Intel's share price dropped by almost a quarter on Thursday. The drop followed the company's third-quarter results. Sales of chips for PCs fell, and customers said PC demand is slowing because computer memory has become more expensive and harder to get.

Key numbers

  • Revenue rose 21 percent from a year earlier, to $16.5 billion.
  • Sales for data center and AI products grew 78 percent.
  • Gross margin (the share of each sale left after direct costs) was 43 percent.
  • Sales for PC and physical AI products were $8.1 billion. That was down 5 percent from a year earlier and down 9 percent from the last quarter.
  • CEO Lip Bu Tan expects the PC chip market to shrink 12 percent next year.

Why memory matters

Computers need memory to work. Memory makers say shortages will last a long time. SK Hynix, a big Korean memory company, expects shortages to last until 2030. This makes PCs more expensive, so people buy fewer of them, and that hurts Intel's biggest business.

Why it matters

Intel's main business, PC chips, is in trouble. The CEO hopes that AI tasks will need more server CPUs, because CPUs use less energy than GPUs for some jobs. But Intel may not be able to build enough chips to earn that money, because it is struggling to get key supplies such as silicon wafers. Investors are unsure when, or if, the boom will help the company.

What to watch

  • Whether memory prices and supply start to get better.
  • Whether Intel can get enough silicon wafers to meet server CPU demand.
  • How much server CPU sales grow in Intel's next financial year.
  • Whether the PC chip market shrinks by the 12 percent Intel predicts.

Glossary

CPU
The main processing chip in a computer. It does most general tasks and follows step-by-step instructions.
SK Hynix
A South Korean company that makes computer memory chips.

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