People aren’t buying as many PCs — and Intel is feeling the multibillion-dollar burn

Photo by Amelia Holowaty Krales / The Verge

Sales of personal computers exploded two years in a row as a result of the COVID-19 Pandemic. The good times for PC and chipmakers are over. The slump in Chromebook sales has made way for an even bigger decline that is hitting Windows manufacturers as well, and today, chipmaker Intel has revealed a 25 percent decline in consumer chip sales. The market for PCs is expected to shrink by 10% this year.

Intel CEO Pat Gelsinger said on the earnings call that some of the company's largest customers are reducing inventory at a faster rate than in the last decade.

The global PC market has already fallen by over 12 percent compared to last year, according to a report. Tim Cook suggested that Apple may have been selling out of its Mac inventory as it reported a 10 percent decline in Mac sales.

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Intel lost half a billion dollars in the second quarter due to a 22 percent revenue decline. It had a profit of $5.1 billion in the second quarter of the year.

Intel is going to raise the prices of its chips. Is that something that could help? The company's data center business fell in revenue and operating income.

Falling sales aren't the only reason for Intel's losses. The slide deck shows that the company lost half a billion dollars just to launch its lackluster first- generation of graphics cards. The company won't meet its target of four million units this year, but they are on track for $1 billion in revenue by the end of the year, and Intel will ship the A5 and A7 Arcdesktop graphics cards next quarter.

The company is seeing a loss of another $155 million to ramp up its foundry services business, which is used to make chips for other companies. Building chips for other companies is something the company has never done before, but is part of its new plan.

Congress just passed the CHIPS Act, which will approve $52 billion in funding for companies to manufacture chips in the US, and it's thought that a lot of that money will go to Intel. It's not likely that the funding will fix the chip shortage or make the US a chip manufacturing powerhouse like its rivals in Asia, but Intel has promised factories and jobs based on that money. Some of that money is expected to come from Intel in the next few years.

Intel confirmed today that it is exiting the Optane memory business and that it has exited the drone business as well. The Register reported earlier this month that Kimbal Musk bought Intel's drones business.

The CFO thinks that Q2 and Q3 will be the financial bottoms for the company.

The phone chip business of the company was up 59 percent this quarter to $6.1 billion.