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Intel Raises Forecast on Improving PC Demand

The chip maker is upgrading its expectations for the first time in two years, citing growing PC supply chain inventory and increasing demand for PCs.

Lenovo laptop

Intel executives said revenue expectations for the third quarter are better than initially predicted, due in large part to an improving PC market.

Company officials on Sept. 16 announced that they expect third-quarter revenue to be $15.6 billion—plus or minus $300 million—a significant improvement over the $14.9 billion originally offered in July. They cited replenishment in the PC supply chain inventory and "signs of improving PC demand" as the drivers.

The forecast upgrade—reportedly the first since the second quarter 2014—comes as good news for Intel and others in the PC industry, who have been impacted over the past several years by the steady decline of systems worldwide. Business users and consumers were spending more of their IT dollars on smartphones and tablets, and holding onto their PCs longer. At the same time, analysts have said that OEMs had done little in terms of designs and features to entice users to buy new systems.

That's changed in recent years. The tablet market is in decline, and smartphone shipments have slowed as the market has matured. In addition, the launch of Microsoft's Windows 10 operating system and new processors from Intel are now appearing in a wide range of form factors, from traditional desktops and notebooks to two-in-one and convertible systems, which can be used as either a traditional laptop or as a tablet. In addition, Advanced Micro Devices also is targeting premium systems with its new "Zen" microarchitecture, which initially will begin appearing in desktops later this year and into 2017.

Intel officials also have been talking about the hundreds of millions of PCs still in use that are five years old or older, and the significant performance improvements in the new systems. PCs powered by the vendor's upcoming "Kaby Lake" chips will be 1.7 times faster at traditional processing jobs, three times faster running high-end 3D games, 8.6 times faster at creating and sharing 4K 360-degree video, and 15 times faster at creating video in near-real time.

In July, analysts with Gartner and IDC said that PC shipments in the second quarter had declined again, but not as sharply as expected. Gartner said shipments fell 5.2 percent over the same period in 2015, while IDC said they dropped 4.5 percent. However, IDC had forecasted a decline of 7.4 percent.

In the second quarter, Intel's Client Computing Group saw revenue hit $7.3 billion, a 3 percent year-over-year decline.