Intel says chip shortage to blame for Q3 sales slump

Intel has that the ongoing global chip shortage has led to a 2% decline in sales, in its financial results for the third quarter of 2021.

Q3 revenue for the tech giant’s Client Computing Group (CCG) business unit, which includes its PC chip business, was below expectations largely due to the company being unable to supply surging demand for laptop components from manufacturers.

At $18.1 billion, Intel’s revenue was below estimates, with the tech giant predicting $18.3 billion, compared with Refinitiv analysts’ expectations of $18.24 billion.

The news caused Intel’s shares to fall more than 8% in extended trading on Thursday.

Commenting on the financial results, Pat Gelsinger, who was appointed Intel CEO at the beginning of 2021, told CNBC that the company is currently “in the worst” of the component shortage.

“Every quarter next year we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023,” he said, adding that data centres are significantly affected by the shortage.

“Data centres are particularly struggling with some of the power chips and some of the networking or ethernet chips,” he told the publication.

Gelsinger previously warned of the impact of the shortage in July, predicting the chip crisis would likely continue until at least 2023 and would lead to revenue losses for rival chipmakers as well as Intel itself.

The tech giant’s financial results follow news that it had failed to secure a deal with semiconductor manufacturer SiFive, which it had previously offered to acquire for $2 billion. People with knowledge of the matter told Bloomberg that the two companies were unable to reach a consensus regarding the financial terms of the deal, or how SiFive’s technology would be integrated into Intel’s chip roadmap.

The San Francisco-based chip company, which is seen as a potential challenge to Cambridge’s Arm, aims to provide a more affordable chip alternative based on the open-source RISC-V computing architecture. By acquiring SiFive, Intel would have been able to take advantage of its chip technology to potentially weather the storm of the global semiconductor shortage.