Asked what is driving PC weakness behind Intel's steep drop, the Bloomberg Intelligence semiconductor analyst ties it to the memory crunch. Memory makers are shifting capacity to AI data centers, raising PC costs.
…continues to stay strong. But however, again, the supply constraints on the wafer side, on the substrate strides are really limiting on how much they can ship. So there's not enough offset coming from data center or not enough goodness coming from data center to offset all the weakness in the PCs.
What's going on with the PC market? What's the drivers there?
Yeah, I mean, so we are all aware about the memory crunch happening, right? So what's happening is most of the memory players are allocating their capacity towards the better ASV, better margin, high growth data center market. So that takes away capacity from the PC side. Plus, memory prices in general have just skyrocketed, almost doubled in the 18 months and are expected to grow at least on the low level 50%. Some are claiming 70% to 80% next year. So, you know, PC are a very consumer company. exposed markets. So there's a lot of price sensitivity there. So the combination of memory prices being so high makes the bomb, the bill of materials to build a PC higher, plus memory makers allocating supply away from PCs. The end result of all of that is PC makers don't want to build up inventory. They are worried about it and they can't push down these prices to consumers because that also impacts the demand.
Intel, of course, has been trying to move into the AI business as well, and it has a data center and AI unit. How did it do there?
That was a segment they did really good. They beat through the estimates and they've also guided it forward pretty well. More importantly, despite the PC headwinds, they're still guiding the company to grow, the total revenues to grow in 2027. And we believe that is mostly coming from the goodness…
Kunjan, that doesn't sound like there's an easy fix here. It just seems like maybe it's just time.