The PC Pays the Memory Bill

Intel beat its own forecast for the third quarter, then said the fourth would be worse. Revenue was $16.5 billion, up 21% from a year earlier. For the fourth quarter Intel expects $15.0–16.0 billion and 25 cents a share of adjusted profit, about $1.8 billion short of analysts’ forecasts, by one analyst’s estimate on the call. Intel blamed PCs, and blamed PCs on memory. Its shares traded about 30% lower on 30 October, which Benzinga called the worst day since July 1974.

Two shortages in one company

Intel now has too little of one thing and too few buyers for another.

Its data center chips sell out. Revenue there rose 78% to $7.3 billion, and Intel’s quarterly report says demand for some of them “continued to exceed available supply”. On the call, Intel said it expects the industry to stay short of supply into 2028. What holds Intel back is substrates, the base its packaged server chips sit on, and capacity on its Intel 3 process. After the quarter ended it signed two deals for substrates that will cost it $5.3–6.1 billion.

Its PC chips do not sell. Client revenue fell 9% from the second quarter to $8.1 billion, less than Intel had planned for, and Intel expects it to fall more than 20% again in the fourth while data center rises by a mid-teens percentage. On our arithmetic that puts data center near $8.4 billion and PCs under $6.5 billion. On Intel’s own forecast, servers will outsell PCs.

The bill reaches the PC

Intel’s explanation runs in a chain. PC makers pay far more for memory, so PCs cost more, so fewer people buy them, so PC makers cut their orders for Intel’s chips. On the call, Intel put 2026 PC units down about 12%, the second half down more than 20%, and said it plans for 2027 down about 10%, with no lasting recovery until memory gets easier to buy and cheaper. David Zinsner, the finance chief, put it in the results release: “we see the PC slowdown continuing at least through the first half of next year”.

None of this was hidden. TEXXR’s archive logged the bill as it ran up. Dell warned customers of 15–20% price rises in December 2025. IDC said PC shipments could shrink by up to 9% in 2026. In February HP said memory had become 35% of what it costs to build a PC, up from 15–18% a quarter earlier. In March TrendForce reckoned a $900 notebook would need to sell for about 40% more to keep its makers’ margins. At the end of September Micron’s chief executive said shortages would last into 2028 and that customers would pay “much higher prices”. On 24 October, five days before Intel reported, Counterpoint counted third-quarter PC shipments down 21% from a year earlier.

Intel saw it too. On the call it said it had warned before that memory could squeeze PC sales in the second half, and that the squeeze grew late in the quarter. On 12 August, three weeks after its second-quarter results, Intel sold 242 million new shares at $95.00 and raised $23.0 billion. Those shares traded about a third lower on 30 October.

What the 10-Q adds

Intel filed its quarterly report alongside the results. It holds three things the coverage passed over.

• A gain for falling. Under its 2025 Secure Enclave deal Intel holds 132 million of its own shares in escrow for the US government, released as the government pays out, and it carries them as a liability at market value: $13.7 billion at the end of September. When the stock rises Intel books a loss, $12.6 billion so far this year. When it falls Intel books a gain. The stock closed at $123.00 on the quarter’s last day. If the liability moves with the price, a price near $64 cuts it by about $6.5 billion, which Intel would record as profit in the fourth quarter. That is our arithmetic; Intel gives no estimate.
• An accident, and a risk with no cover. In mid-October an accident at Intel’s factory in Kiryat Gat, Israel, “resulted in employee casualties and injuries” and shut it for about two weeks. Intel puts the cost at about $300 million of fourth-quarter revenue, and likely as much again in the first. The same filing says “a significant portion” of its revenue comes from chips made there, that it is “not insured for business interruptions resulting from war or political violence”, and that Iran put Intel “near the top” of a list of US companies it threatened in March.
• Foundry customers, still unnamed. Outside customers paid Intel’s contract-manufacturing arm $411 million, mostly from one program Intel does not expect to repeat. Lip-Bu Tan, the chief executive, said on the call that Intel expects to announce two customers within two quarters, and that it does not otherwise name them. Apple, rumoured as a customer since May, did not come up.

What it means for the names we cover

At 1:15pm New York time on 30 October, against the previous close, AMD was down 12%, SanDisk 13%, Micron 6%, ASML 7%, TSMC 6%, Nvidia 5%, and the iShares chip fund 9%. Analysts changed their ratings on Intel alone; TipRanks put the spread down to its PC warning.

• AMD sells PC chips into the same market and reports on 3 November. Its client forecast will show whether Intel’s PC call is the industry’s or Intel’s. In servers, Intel says next year’s market share will go to whoever can ship.
• The memory makers, Micron, SanDisk, SK hynix and Samsung, set the price Intel says is shrinking PC sales. Intel has now put a size on what that price costs in units. The two companies’ statements fit: Micron says prices stay high into 2028, Intel says PCs will not recover until they fall. Not all of their fall is Intel’s: SanDisk reported its own quarter on 29 October, and on 30 October Kioxia, its flash partner, forecast less profit than analysts expected.
• ASML and the toolmakers sold off although Intel will spend more on them. On the call Intel said gross capital spending of about $20 billion this year will rise sharply in 2027, that its firm orders to equipment makers rose nearly 40% in a quarter, and that it does not expect positive free cash flow next year.
• Nvidia bought 214.7 million Intel shares at $23.28 in 2025, for $5.0 billion. On our arithmetic, the fall from Thursday’s close to about $64 took some $6 billion off their value.

What to watch

• 3 November: AMD’s client forecast, against Intel’s 20%-plus fall.
• End of October: whether Fab 28 restarts on time, and whether the first-quarter hit is the $300 million Intel guessed or more.
• December: Micron’s quarter, date not yet set, and what it says about PC and phone memory prices.
• Late January: Intel’s fourth-quarter GAAP profit, and how much of it is the escrow gain.
• By about April 2027: the two foundry customers Tan expects to announce.

Coverage of Intel was already running hot before the print: 52 TEXXR articles in the first 30 days of the quarter, against a full-quarter average of 45.2 over the previous eight.

Sources