China, Semiconductor Companies&#

Positive 4Q15 Results: What to Expect from the Tech Sector in 1Q16

Shares of semiconductor giant Intel (INTC) fell by 9.1% to $29.76 on January 15, 2016, after the firm raised concerns about its sales growth and suppliers. Intel projects 1Q16 revenue at $14.1 billion—lower than analysts’ estimates. Intel attributed the lower guidance to falling PC (personal computer) sales in China (FXI). China is one of the biggest markets for Intel.

“Our team on the ground in China has gotten fairly cautious about what’s going on, ” said Stacy Smith, Intel’s CFO.

Shares of technology firms including Micron (MU) fell 8%. Advanced Micro Devices (AMD) fell by 8% in its share price. Cloud services company Rackspace’s (RAX) shares fell by 7%. Hewlett-Packard’s (HPQ) shares fell by 4.8% on January 15, 2016.

Intel also stated that the unit shipments of PC chips in 4Q15 fell by 16% YoY (year-over-year). Consumers in China prefer tablets that generally don’t contain Intel’s chips. They also buy products or models that use relatively cheaper Intel components.

As we stated above, China is one of the biggest markets for PCs. Analysts think that PC sales will be weak for calendar 2016. “The PC is not a good story in China, ” said Handel Jones, an analyst at International Business Strategies.