PC Market Upturn Shown from Intel Earnings

John Ward Author

Intel’s Q3 financial announcement confirms that the protracted decline in PC sales in 2023 has reached the bottom, paving the way for growth to resume in Q4. The company announced revenue of $14.2 billion for Q3, down 8% from $15.3 billion in Q3 2022. This rate of decline was well below the 15% drop reported for Q2.

Intel’s Client Computing Group Saves The Day

Intel’s Client Computing Group (CCG), which includes the company’s PC microprocessor business, exceeded expectations with a marginal revenue decline of just 3% year-over-year, a significant improvement from the 12% decline in Q2. Moreover, CCG revenue increased sharply on a sequential basis, rising to $7.9 billion in Q3, up from $6.8 billion in Q2, an approximate increase of 16%.

With CCG accounting for the majority of Intel’s revenue, the division played a significant role in mitigating the company’s losses during the quarter. Intel reported that the decline in CCG revenue in Q4 was spurred by a drop in the size of the total available market (TAM), as consumer PC purchases continued to fall following the COVID-19-driven sales boom of 2021.

However, the CCG’s better-than-expected performance was aided by the completion of inventory burns at its customers, according to Intel. With the customer inventory issues resolved, Intel expects strong sequential growth to continue in Q4.

Focus on Price Protection by Locking in Orders

Intel’s results conform with other market indicators showing a shift in conditions for the PC market. Global PC shipments are set to attain a year-over-year increase in Q4, ending a long streak of declines, according to market watchers. Moreover, the Supplyframe Commodity IQ Demand Index for MPUs is set to remain above the baseline in Q4, indicating a rise in sales.

The Commodity IQ Inventory Index for MPUs is projected to decline by 6.6% sequentially in Q4. However, the index remains above the baseline level, indicating that some further inventory reductions will be required by MPU suppliers and in the channel before overall stockpiles decrease.

For buyers, the resumption of growth sells rising prices for MPUs. The Commodity IQ Price Index for MPUs is set to rise by 47% from September to October, and is on track to remain above the baseline during Q4, showing costs are on the increase.

With pricing and demand on the rise, PC MPU buyers will face more challenging purchasing conditions in Q4. Now is the time to strive for price protection and lock in orders before costs increase further.

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