PC demand has gotten so weak that AMD’s revenue for Q3 came in $1.1 billion under the company’s original projections.
AMD today warned investors that its Q3 revenue will only reach about $5.6 billion, down from the forecasted $6.7 billion. The company is blaming the shortfall on weak demand for its client business, which includes selling desktop processors and laptops for consumers.
Specifically, AMD pointed to “reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain.” The lower shipments combined with a falling average selling price for chips led to a drop in profit margins. As a result, Q3 revenue for the client business fell year over year by 40%.
“The PC market weakened significantly in the quarter,” said AMD CEO Lisa Su in the announcement. “While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain.”
The company is also going to pay $160 million “primarily for inventory, pricing, and related reserves in the graphics and client businesses” in an effort to sell more CPUs and graphics cards at retailers.
The news doesn’t bode well for the rest of the PC market. The ongoing economic downturn and inflation has caused demand for PCs to hit a slump following two years of soaring growth during the COVID-19 pandemic.
In some good news, AMD said revenue for its other segments in data centers, gaming, and embedded grew significantly in the quarter. The $5.6 billion in revenue for Q3 also still represents a 29% year-over-year growth for the company.
In addition, AMD just launched its new Ryzen 7000 processors, which could spark some PC building demand throughout the rest of the year. The company plans on reporting the full Q3 results on Nov. 1.