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AMD Cuts Revenue Forecast Amid Worst Slump in PC Shipments in Years

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Advanced Micro Devices Inc.


AMD -0.13%

cut its revenue forecast for the most recent quarter citing weaker-than-expected demand for the personal computers that use its chips.

The chip maker, which sells central processing units for laptops and desktops alongside a large videogame graphics chip business, on Thursday said it expected about $5.6 billion of sales in the just-ended quarter, about $1.1 billion less than it previously said it was expecting when it issued a subdued outlook in August.

Sales in the third quarter are expected to be down 15% from the prior quarter, though up 29% from the year-ago period, when the company formally posts results Nov. 1, AMD said. 

“The PC market weakened significantly in the quarter,” AMD Chief Executive

Lisa Su

said. “While our product portfolio remains very strong, macroeconomic conditions drove lower-than-expected PC demand and a significant inventory correction across the PC supply chain,” she added. 

A global chip shortage is affecting how quickly we can drive a car off the lot or buy a new laptop. WSJ visits a fabrication plant in Singapore to see the complex process of chip making and how one manufacturer is trying to overcome the shortage. Photo: Edwin Cheng for The Wall Street Journal

AMD shares fell more than 3% in after-hours trading Thursday. 

PC shipments are suffering some of their steepest declines in years after elevated pandemic-related sales were followed by a slowdown in consumer spending on electronics, including PCs and smartphones.

Global PC shipments are set to decline 12.8% this year, with those of tablets retreating 6.8%, data analysis firm IDC said last month. “Further contraction is also expected in 2023 as consumer demand has slowed, the education demand has been largely fulfilled, and enterprise demand gets pushed out due to worsening macroeconomic conditions,” IDC said.

AMD’s main competitor,

Intel Corp.

, posted an unexpected loss in the second quarter on its biggest revenue decline in more than a decade. Like AMD, Intel cited PC slowness as the main culprit, forecasting a 10% drop in overall sales of those computers this year.

Graphics-chip company

Nvidia Corp.

, the U.S.’s most valuable chip company by market capitalization, in August issued a profit warning ahead of its quarterly sales and followed later that month with a muted outlook reflecting weaknesses in its PC business and softness in videogaming.

Qualcomm Inc.,

a supplier of chips for mobile phones, cut its smartphone-shipment forecast and gave a downbeat sales outlook in July. Memory-chip maker

Micron Technology Inc.

last week issued another subdued revenue outlook after failing to meet its sales expectations in the latest quarter, linked to the doldrums in the PC and smartphone markets.

AMD said it expects to book a charge of about $160 million mostly to reflect items such as inventory and pricing issues. 

Despite the PC market weakness, AMD said its divisions supplying chips to data centers and videogamers remained strong. The data-center business is expected to bring in around $1.6 billion in the third quarter, up 45% from a year ago, while gaming sales are expected to rise 14%, also to $1.6 billion.

While chip companies closely tied to consumer devices have had a rough few months, other semiconductor suppliers are continuing to see robust demand despite the economic challenges. A chip shortage that started during the pandemic hasn’t subsided in some parts of the industry, including chip makers that supply the automotive and medical-devices industries.

Infineon Technologies AG

, a large German chip maker that supplies chips for cars and industry, posted quarterly revenues in August that beat Wall Street forecasts, and it issued a strong outlook for the following quarter.

NXP Semiconductors

NV, a major supplier to the auto industry, also bucked macroeconomic gloom in reporting better-than-forecast results in July. 

Write to Asa Fitch at [email protected] and Will Feuer at [email protected]

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