Intel's Unexpected Boost: How U.S.-China Trade War is Driving Demand for Older Chips

The U.S.-China trade war has pressured Intel's largest market, China. Surprisingly, it has increased demand for Intel’s older-generation chips, especially for personal computers and servers. This shift in demand is becoming a key factor for Intel in navigating the economic uncertainties. (Source: Reuters)

The trade war threatens Intel’s revenue from China, a critical market. Due to rising tariffs, customers are turning to older, cheaper chips. This shift is altering Intel’s sales strategy and market outlook, as new chips face high tariff risks.

Intel has seen a surge in demand for older chips in both personal computing and data centres. Customers are prioritising cost-effective solutions due to economic uncertainty. This trend highlights a move from cutting-edge to older, more affordable technology.

Rising tariffs and economic uncertainty are causing businesses to be cautious. As a result, many are opting for cheaper, older chips. Intel’s CEO, Michelle Holthaus, noted that customers are hedging their bets against the volatile economic situation.

Intel’s first-quarter sales exceeded expectations, but its outlook for the June quarter is cautious. Rising tariffs and trade tensions may slow growth. While stockpiling chips helped, Intel is facing a tough road ahead with uncertain demand.

China’s retaliatory tariffs could reach up to 85% on U.S.-made chips. This could lead to significant revenue losses for Intel in China, which is a major market. Intel is concerned about these tariffs impacting their future sales.

Intel’s CFO, David Zinsner, expressed concern about a potential global recession due to fluctuating trade policies. The uncertainty has increased risks of slower growth and higher costs, affecting Intel’s financial outlook.

Intel hoped for a PC market recovery through AI-powered devices and a new Windows cycle. However, rising tariffs could slow this recovery by making PCs more expensive. This could hurt Intel's sales and growth potential in the PC sector.

In uncertain times, businesses prefer “good enough” over cutting-edge technology. Older chips are gaining popularity as customers seek more reliable, affordable options rather than the latest innovations. This trend could impact Intel’s push for advanced chips.

Intel faces challenges due to trade tensions, economic uncertainty, and shifting demand for older chips. While the company aims to introduce advanced AI-powered chips, the demand for cheaper, older processors may slow growth and affect its strategic goals.(Disclaimer: This article has been sourced from Reuters)