(Reuters) -Intel Corp forecast for first-quarter revenue fell way short of Wall Street targets on Thursday, as the chipmaker struggles with a worsening PC market and its data center clients delay purchases amid fears of a global recession.
The company’s shares fell 7% in trading after the bell as it also expects a surprise loss for the current quarter.
The PC industry is struggling with a pile up of inventory after demand for consumer electronics fell off the cliff following two years of strong growth.
PC shipments fell 16.5% to 292.3 million units in 2022, per data from research firm IDC, forcing chipmakers to cut back production and slash revenue forecasts.
Shrinking PC demand also pressured Microsoft Corp’s More Personal Computing segment, which includes Windows, devices and search revenue, leading to a 19% drop in the segment in its second quarter.
Meanwhile, the data center market has also slowed from double-digit growth as businesses look to cut costs to ride out an economic slowdown.
After Chief Executive Pat Gelsinger returned to the company nearly two years ago, Intel has focused on regaining the lead in chipmaking technology. Outsourcing the chipmaking process has helped rivals like AMD make much smaller and faster chips and outpace Intel’s technology.
The company forecast first-quarter revenue in the range of about $10.5 billion to $11.5 billion. Analysts on average were expecting total revenue of $13.93 billion, according to Refinitiv data.
The company expects an adjusted loss of 15 cents per share versus expectations of a 24 cents per share profit.
Revenue in the fourth quarter fell 32% to $14 billion. Analysts on average expected revenue of $14.46 billion.
(Reporting by Chavi Mehta in Bengaluru; Editing by Sriraj Kalluvila)