Under the economic recession caused by multiple factors, the PC market continues to suffer a "cold wave", and both processors are also experiencing new pain.

According to US media quoting insiders, Intel is planning large-scale layoffs, or thousands of people. AMD's third quarter financial report is expected to be about $5.6 billion, much lower than the previous estimate of $6.7 billion.

Faced with the downtrend of the main market, Shuangxiong suffered a "shock wave" in the open, but perhaps other hidden worries are more difficult than dealing with the downtrend of the PC market.

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PC Market Downward Affected

As the global epidemic has driven the demand for home office, the PC market in the first two years has soared. Although the demand will weaken in 2022 and suffer a sharp decline, Zhao Yi, the research director of Jiwei Consulting, believes that this is normal, and the high shipments in the past two years have also overdrawn some of the demand.

"Judging from the global PC shipment data in the third quarter, it is almost the same as that in 2019, but also slightly higher. Considering that this downward trend is against the background of increasing global inflation, the conflict between Russia and Ukraine, and China's insufficient consumption power, although the year-on-year decline is exaggerated, it is due to the high base last year, but it is relatively normal from the scale." Zhao Yi added.

But the impact of the market downturn is immediate. The latest data from Mercury Research, a market research organization, shows that the shipment of PC processors in the second quarter of 2022 hit a 30-year low, down more than 15% year on year. Moreover, according to the data released by IDC, the global personal computer sales in the third quarter also fell by 15% year on year. The sales of HP, Dell, Lenovo and other PC brands that use Intel processors in PC products fell sharply this year.

In the short term, the decline in PC demand is difficult to ease. Gartner previously predicted that in 2022, the global PC shipment will decline by 13%, and the chip revenue from the PC market will decline by 5.4%.

As both x86 processors in the PC market, Intel and AMD have undoubtedly felt the chill of transmission. In the second quarter of 2022, AMD's revenue will be 6.55 billion US dollars, up 70% year on year. However, AMD recently announced that its revenue in the third quarter was about US $5.6 billion, a sharp decrease of US $1.1 billion compared with previous estimates. This also reflects that the weakness of the PC market may be much worse than previously estimated. In addition to the de stocking of the supply chain, PC processor shipments continue to decline.

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Comparatively speaking, Intel has suffered even more. It can be said that there is an external pursuit of ARM architecture and an internal blockade of x86. The PC market, as a stock market, although the shipment volume in the post epidemic era cannot compare with that in 2021, Intel's penetration in PC shipment has decreased again and again.

According to data, from 2018 to the second quarter of 2022, the shipment of PCs (including desktop PCs and laptops) with ARM architecture CPU will increase from 30% to nearly 40%, the shipment of CPUs with AMD x86 architecture will increase from less than 5% to 12-13%, and the shipment of CPUs with Intel x86 architecture will decrease from more than 60% to less than 50%.

Especially in the second quarter, the revenue of Intel's PC chip business fell by 25% year on year, and the third quarter financial report will be released soon, which is hard to imagine "rebound".

The hidden worry of non dominance

It seems that the weakness of PC market demand and external shocks such as the supply chain have caused pressure on the performance of both companies, but further study shows that other hidden worries may be more difficult to deal with.

Bloomberg said that in addition to weak global demand, the tension between China and the United States has cast a shadow on the development of the semiconductor industry. In particular, the new restrictions on semiconductor exports to China previously announced by the Biden government of the United States will cause backbiting, and the sales of American semiconductor giants will suffer.

Industry insiders also believe that in the PC market, although the ARM architecture processor camp tries to split the market share of x86 CPUs by relying on low power consumption and light office work, other manufacturers' ARM processors will not become popular in the short term. In contrast, AMD, an old competitor, has been gaining momentum in recent years and its share in the PC market has been rising. Its share of desktop PC processors rose to 20.6% in the second quarter, up 3.5% year on year. It can be said that Intel has been under pressure.

"Intel's decision to lay off employees at this time point is not only a factor in the decline of the PC market, but also a result of multiple pressures on other business levels." Judgment of the above industry personage.

If Intel's next-generation CPU for data centers is delayed, it may lead to competitors taking the lead. In addition, after returning to the independent GPU, Intel has made a series of moves in the field of graphics and acceleration GPU, but its performance is still not as expected. At the same time, the successive prohibitions in the United States have also made the situation worse, or hindered the market expansion of its computing system and graphics sector.

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In particular, Intel's IDM2.0 plan has led to a huge change in its business structure. Whether it is capital investment, team building or cultural construction, it still needs a long time to run in.

For AMD, although it has been strong, it still needs to continue to strengthen in the technical and ecological aspects.

The challenges that followed

More worrying things for both men and women may be hidden behind the financial report figures.

With the support of Apple, Qualcomm and other veterans, the Arm architecture camp is gradually encroaching on the traditional territory of the x86 architecture. However, Huawei, Megacore, Haiguang and other companies in China are also taking the route of "encircling cities from rural areas". The share of ARM CPU in the PC market may continue to grow.

At the same time, the Arm architecture is also growing in the server market. According to Jibang Consulting, it is estimated that by 2025, the penetration rate of ARM architecture servers will reach 22%, and the cloud data center will take the lead.

In addition, from the perspective of the global economy, the broader slowdown is still intensifying. On the one hand, Intel has assisted the IDM2.0 policy through acquisitions and stripped off Aoteng's business, which has not been developing smoothly, to start with light equipment. On the other hand, it has boosted the market by releasing new PC processors, GPUs and AI chips.

With Intel's "turn around", if the "cracks" faced by the traditional moat are not enough to shake Intel's country, then the most difficult problem faced by Intel at present is actually how to deal with the challenges of OEM culture, ecology, production capacity, customers, etc. faced by the radical IDM2.0 policy, and how to regain the momentum and hold the bull's ear again in the challenge against advanced technology of TSMC and Samsung Electronics?

AMD's challenge still lies in the integration of technology and ecology. The above industry insiders pointed out that AMD should continue to strengthen the cooperation with TSMC on advanced manufacturing processes in terms of technology development, and continue to add additional value to products by using Chiplet technology, such as 3D VCache technology. They can also think about how to create killer applications by using the products of Xilinx.

In the face of the data center market, although AMD's revenue began to slow down on a month on month basis, industry insiders suggested that the data center market is still the most challenging and growth potential in the future. AMD needs to further build a comprehensive ecosystem, so that the target market and end users can obtain higher performance and energy efficiency.