Intel Logo (Photo : Facebook/Intel)
Sale of Intel's microprocessor chips has taken a hit, following lower sales of computers in China and servers to cloud companies. The slump in sales was revealed in company's fourth-quarter results.
According to reports by Wall Street Journal (WSJ), unit shipment of PC chips was 16 percent lower in Intel's fourth-quarter report. Furthermore, revenue reported from Intel's data center group stood at 5 percent in its fourth-quarter, compared to 12 percent in its third quarter.
Analysts have attributed the dipping sales as the leading reason why Intel Corp. lowered its financial projections for first quarter of the year. Following this announcement, company's shares plunged by 9 percent on Jan. 15.
Venture Beat quoted Intel's CFO- Stacy Smith as saying that the growth in China and emerging markets had begun to slowdown in consumer markets and data center business.
Speaking to WSJ, an analyst at International Business Strategies Inc. Handel Jones mentioned that the leading reason of Intel's dip sales was the fact that the traditional PC customer base in China was shifting to smartphones and tablets. Both of these products do not contain Intel chips. In addition, those who buy PC opt to purchase cheaper models, which normally do not contain Intel's chips.
The 5 percent growth rate of Intel's data center unit came as a real shocker. This is especially because in November 2015, server purchases were growing at a whopping 30 percent rate for seven big cloud companies, which includes Google, Amazon, Facebook, Microsoft, Baidu, Tencent and Alibaba. Intel had even forecasted a 40 percent growth rate among the next 50 biggest cloud companies.
Clearing the confusion, Intel's executives said that mid-year sales in data center business could be slow because companies do not want to disrupt their services by installing new computers. An accurate picture of sales could be drawn only by looking at results from multiple quarters they hold.
