Intel AMD hopes AIPC will boost performance, but do consumers have the money to switch?

On November 2, it was reported that after two years of growth caused by the COVID-19, the sales of personal computers (PCs) had been sluggish. The decline is so significant that the market research company IDC's announcement of a 7

On November 2, it was reported that after two years of growth caused by the COVID-19, the sales of personal computers (PCs) had been sluggish. The decline is so significant that the market research company IDC's announcement of a 7.6% year-on-year decrease in PC sales in the third quarter is a significant improvement, as sales have been declining at a double-digit rate for five consecutive quarters. IDC predicts that global PC shipments will decrease by 14% this year, reaching 252 million units, setting the company's lowest sales volume in more than a decade.

However, it is strange that personal computers have become the lifeline for Intel and AMD this financial reporting season. According to AMD's third quarter financial report released on Tuesday, the personal computer business revenue increased by 42% year-on-year, making it the only chip manufacturer to achieve growth in the quarter. Although Intel's personal computer business revenue has decreased by 3% compared to the same period last year, this is far better than Wall Street's expected 10% decline.

For these two companies, the sales growth in the personal computer department offset the more severe weakness in the data center department. The data center department represents expensive chips sold to technology giants operating cloud computing, which is currently the most critical market in the chip industry.

For Intel and AMD, this market is also undergoing a transformation. The sudden explosion of generative artificial intelligence has led to a surge in demand for accelerator systems based on graphics processors. Technology giants such as Microsoft, Google, Amazon, and Facebook's parent company Meta have all shifted most of their capital expenditures towards artificial intelligence server components, with Nvidia being the main beneficiary.

In the six months to the end of September, the total revenue of Intel and AMD's data centers decreased by 11% year-on-year. According to Wall Street analysts' general predictions for Nvidia as of the third quarter of October, the company's data center revenue is expected to double year-on-year.

Intel and AMD have not given up on artificial intelligence. The two companies plan to hold a grand launch event next month to showcase their new chips. AMD even predicted the revenue of its data center GPU chips in the fourth quarter and next year on Tuesday, which surprised analysts.

AMD expects the product line to generate $2 billion in revenue next year. Although it only accounts for a small portion of NVIDIA's expected data center sales, it represents strong growth for AMD. According to FactSet data, Wall Street expects AMD data center sales to soar 58% to $10.4 billion in 2024. This news pushed AMD's stock price up more than 7% on Wednesday.

However, AMD's personal computer business revenue is expected to grow by 27% next year, while Intel is expected to grow by 13%. This reflects people's high expectations for this mature market. In the years before the outbreak of the epidemic, this market had already shown a downward trend.

At least based on people's beliefs, it is expected that personal computers that will be launched next year and supported by artificial intelligence will sell well. Intel CEO Pat Gelsinger stated on the company's earnings conference call last week that "the arrival of artificial intelligence personal computers represents a turning point in the personal computer industry." AMD CEO Lisa Su also predicted on Tuesday's conference call that artificial intelligence personal computers "will fundamentally redefine the computing experience in the coming years.

However, it is still uncertain whether artificial intelligence personal computers can occupy the mainstream position. Even if these new artificial intelligence machines go on sale, many personal computers sold during the peak of the epidemic will still be in the regular upgrade cycle of 5 to 6 years, and users may not easily replace them.

IDC predicts that global personal computer sales will grow by less than 4% next year. Many analysts predict that the industry's annual shipment volume will remain between 250 million and 270 million units, comparable to before the pandemic. Allowing consumers to spend more money on more intelligent computers may be a daunting task, as these computers are still primarily used for sending and receiving emails and surfing the internet. (Small)