Intel’s share price has dropped 10%, as the Coronavirus pandemic continues to take a toll. The Californian chipmaker’s value took a dive on underwhelming revenues, which analysts blame on the pandemic’s freezing of government and enterprise contracts.
Intel’s data-center division posted revenues of $5.9 billion in the third quarter of the year – well down on its $6.21bn estimate, according to FactSet, a software company. The shortfall comes amid a surprising rally for Intel’s PC division, whose $9.8bn revenue beats a $9.09bn estimate.
“You’re seeing the demand shift from desktops and higher-end enterprise PCs to the entry-level consumer and education PCs,” Intel CEO George Davis told Reuters. “Even though the volume is good, your (average selling prices) are coming down, so that impacts your gross margins a little bit.”
The COVID-19 pandemic has prompted a wave of work-from-home employees, who have either chosen or been ordered to stay away from the office to help prevent the virus’ spread. That has provided a springboard for Intel PCs and laptops.
But those chips are less profitable that the firm’s data center and more powerful enterprise chips. Intel already admitted in July that it is dealing with a manufacturing bottleneck that will put next-generation chips back six months,
Respite comes in the form of a $9bn sale of one of Intel’s loss-making chip wings, to South Korea’s SK Hynix. But the 1968-founded brand, one of Silicon Valley’s most recognizable, faces stiff domestic competition from AMD and Nvidia Corp – even if the Trump White House continues to stifle attempts from Chinese chipmakers like SMIC to enter the US.