CHIPMAKER Intel announced a 28 percent drop in profits to $2bn as the firm continued to grapple with falling demand for PCs.
Intel's second quarter financials are the first with its newly appointed CEO at the helm and show that Intel is not immune to falling PC sales. The firm reported revenues of $12.8bn, a modest decline of five percent from the same quarter last year, but profits fell by a worrying 28 percent to $2bn.
With Intel launching its fourth generation Haswell chips during the quarter and shipping them to OEMs and system builders long before the launch, that will have had an effect on the firm's second quarter financial results. However given that the firm reported that sales and more importantly profits were down, its results don't reflect well on Intel's ability to drive PC upgrade cycles.
Intel said sales in its PC group fell 7.5 percent from the same period in 2012 and perhaps more worrying was that datacentre sales, mainly Xeon chips, did not increase from 2012.
Brian Krzanich, who has now been CEO for two months, said the firm will focus on its system on chip (SoC) strategy to get into smaller devices such as smartphones and tablets. He said, "Looking ahead, the market will continue buying a wide range of computing products. Intel Atom and Core processors and increased SoC integration will be Intel's future.
"We will leave no computing opportunity untapped. To embrace these opportunities, I've made it Intel's highest priority to create the best products for the fast growing ultra-mobile market segment."
The problem for Intel is that the consumer SoC market, that is, the market for chips that end in up smartphones, tablets and set-top boxes, is fickle and harder to break into than the PC market that has only AMD and Intel as major players. Krzanich faces arguably the biggest challenge of any recent Intel CEO in trying to break the monopoly ARM vendors have in what is undoubtedly the market that holds the key to the semiconductor industry's future growth. µ