AMD revenue shortfall warning signals chip slump could be worse than expected

Signs of AMD are seen at the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. REUTERS/Aly Song/Files

(Reuters) - Chipmaker Advanced Micro Devices Inc on Thursday provided third-quarter revenue estimates that were about a billion dollars less than previously forecast, signaling the chip slump could be much worse than expected.

AMD shares dropped 4% in after hours trading, dragging down shares of Nvidia Corp and Intel Corp by over 2%.

"The PC market weakened significantly in the quarter," Chief Executive Officer Lisa Su said in a statement, adding that macroeconomic conditions drove PC demand lower than expected.

"I think AMD is showing that nobody is safe from the post-pandemic PC downturn, and those inventory corrections are also impacting the company," said Anshel Sag, chip analyst at Moor Insights & Strategy. "Overall, this looks to be more of a cyclical correction within a single, albeit large, business unit rather than a structural or strategic one."

Su said AMD's data center, embedded, and gaming segments maintained strong growth.

The company said it expects third-quarter revenue of about $5.6 billion. That compares with its forecast in August of $6.7 billion, plus or minus $200 million.

AMD said its earnings will be released Nov. 1.

(Reporting by Yuvraj Malik in Bengaluru and Jane Lanhee Lee in Oakland, California; Editing by Sriraj Kalluvila and David Gregorio)

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