Shulou(Shulou.com)11/24 Report--

PC sales have been sluggish after two years of growth triggered by the new crown pneumonia epidemic, Nov.2 news. The decline was so steep that IDC reported a 7.6% year-over-year decline in PC sales in the third quarter, a significant improvement after five consecutive quarters of double-digit declines. IDC expects worldwide PC shipments to fall 14 percent this year to 252 million units, the company's lowest sales in more than a decade.

Oddly enough, however, PCs have been Intel and AMD's lifeline this earnings season. According to AMD's third-quarter earnings report released on Tuesday, PC revenue rose 42% year-on-year, making it the chipmaker's only business to grow in the quarter. Although Intel's PC revenue fell 3% from a year ago, it was far better than Wall Street's 10% decline.

For both companies, sales growth in the PC division offset more severe weakness in the data center division. The data center segment represents expensive chips sold to tech giants that operate cloud computing, which is currently the chip industry's most critical market.

For Intel and AMD, the market is also shifting. The sudden explosion of generative AI has led to a surge in demand for graphics-processor-based accelerator systems. Tech giants such as Microsoft, Google, Amazon and Facebook parent Meta have shifted most of their capital spending to AI server components, with Nvidia being the main beneficiary.

For the six months to the end of September, Intel and AMD's total data center revenue fell 11% year-over-year. Nvidia's data center revenue is on track to triple year-over-year, according to Wall Street analysts 'consensus forecast for the company's fiscal third quarter ending October.

Intel and AMD haven't given up on AI. Both companies plan to hold big launch events next month to showcase the new chips. AMD even surprised analysts on Tuesday by forecasting revenue for its data center GPU chips in the fourth quarter and next year.

AMD expects the product line to generate $2 billion in revenue next year. Although it is a small fraction of NVIDIA's projected data center sales, it represents strong growth for AMD. According to FactSet, Wall Street expects AMD data center sales to soar 58 percent to $10.4 billion in 2024. The news sent AMD shares up more than 7 percent Wednesday.

AMD's PC revenue is also expected to grow 27 percent next year, though, while Intel expects growth of 13 percent. This reflects high expectations for this mature market. In the years leading up to the outbreak, the market had been on a downward trend.

AI-powered PCs expected to hit the market next year will sold well, at least by belief. "The arrival of AI PCs represents an inflection point for the PC industry," Intel CEO Pat Gelsinger said on the company's earnings call last week. AMD CEO Lisa Su also predicted on Tuesday's conference call that AI PCs "will fundamentally redefine the computing experience in the coming years."

However, it is still uncertain whether AI PCs will dominate the mainstream. Even if these new AI machines go on sale, many PCs sold during the worst of the epidemic will still be in regular upgrade cycles of five to six years, and users may not easily replace them.

IDC expects global PC sales to grow by less than 4 percent next year. Many analysts predict that annual shipments in the industry will remain between 250 million and 270 million units, the same as before the outbreak. Getting consumers to pay more for smarter computers, which are still largely used for e-mail and surfing the web, may be a daunting task.

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