Chipmaker Intel (INTC) is struggling with softer cloud spending and lower memory prices. The decline in sales in China due to trade war tensions has also hurt Intel’s performance. The scattered purchasing patterns by cloud-computing vendors have also accelerated investors’ concerns. Amid concerns, Intel reported lower-than-expected revenues in the fourth quarter of 2018 that grew only 9% YoY, lower than the preceding quarter’s growth of 19%. The revenue growth is likely to remain soft in the upcoming quarter. Results for the quarter are expected on April 25. Like Intel, iPhone maker Apple and rival chipmaker NVIDIA (NVDA) were also hurt due to a slowdown in China.
Intel anticipates first-quarter revenues to be $16 billion. For 2019, Intel expects revenues of about $71.5 billion in comparison to analysts’ estimates of $70.7 billion.
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Factors that hurt revenue
Notably, the world’s largest chipmaker is struggling with a supply shortage of PC CPUs related to its 10-nm processor chips. Rival Advanced Micro Devices (AMD) is set to intensify competition with Intel with its new server chips and high-margin products. AMD is launching its second-gen Epyc server CPUs in mid-2019.
The demand for the modem is also declining as Intel’s primary client Apple is suffering from waning iPhone sales. The data center revenues were also hit by weaker Chinese demand and a slowdown in sales to cloud service providers. The demand for memory chips is also declining, which is further hurting the company. Notably, NAND (negative AND) prices have fallen in recent months due to soft demand in the smartphone as well as PC markets. The US-China trade tensions along with a slowdown in China has also dented chips’ demand.