By Jeff Dorsch
The personal computer has been a major sales driver for the semiconductor industry over the past three decades. Now, the industry’s perennial lodestar is becoming something of a millstone as consumers flock to the burgeoning market of smartphones, tablet computers and other mobile devices. The PC market has seen stagnant growth for the past year and shows no signs of resuming growth in the near future, with IHS iSuppli forecasting that PC shipments will fall this year for the first time since 2001. During the third quarter, Lenovo Group overtook Hewlett-Packard as the top PC supplier in the world, based largely on sales in China – the one region where PC growth is still positive.
Advanced Micro Devices relies on PC products for about 85 percent of its revenue. The chip company took a big hit in its third quarter, with revenue falling nearly 25 percent from a year ago to $1.27 billion. It posted a net loss of $157 million, compared with net income of $97 million in the third quarter of 2011. As a result, AMD will lay off about 15% of its worldwide workforce during the fourth quarter.
More importantly, AMD will restructure its operations to refocus its product lines toward other, higher-growth applications, such as embedded electronics, microservers and ultra-low-power mobile devices. “We intend to drive 40 percent to 50 percent of our portfolio to faster-growth markets where our IP is the key differentiator,” said AMD CEO Rory Read, who also indicated that the company would make use of third-party intellectual property in the future.
Intel is counting on the Ultrabook form factor to replace some of its chip sales for the PC market. The slimmer, smaller computers have yet to find much acceptance among consumers, however, as they are generally more expensive than more powerful laptops or desktops. IHS iSuppli recently reduced its 2012 forecast for Ultrabook shipments, saying it now expects 10.3 million units to ship this year, less than half of the 22 million units it forecast earlier.
For its third quarter, Intel reported net income of $3 billion on revenue of $13.5 billion, after earlier warning that Q3 revenue would come in lower than previous predictions. That compared with net of $3.5 billion on revenue of $14.2 billion a year earlier.
Intel is pushing its low-power Atom processors to be used in smartphones and tablet computers, and it has met some success there, especially in products that will run the forthcoming Windows 8 and Windows Phone 8 operating systems. In another sign that the once-formidable “Wintel” duopoly is fading away, Microsoft this month will introduce Windows RT in addition to Windows 8, with Windows RT intended for computers that are built around processors based on ARM Holdings chip designs. In other words, not Intel processors.
PCs aren’t going away any time soon, yet their long dominance in computing is clearly assuming a lower profile.