Intel's Older Parts Are In Demand Thanks To US-China Trade War: 'Tariffs Have Everybody Hedging Their Bets,' Says Executive

The ongoing U.S.-China trade war is proving to be an unexpected driver of demand for Intel Corp’s INTC older generation of chips.

What Happened: “In client, we are seeing strong demand on older-gen parts and in data center as well,” said Michelle Johnston Holthaus, Intel’s chief products officer, during a call after Intel's first-quarter earnings report, according to Reuters.

“Macroeconomic concerns and tariffs have everybody hedging their bets.”

Although U.S. tariffs on chips have been exempted for now, the Chinese government has retaliated with tariffs as high as 85% on U.S.-made chips, according to the China Semiconductor Industry Association.

See Also: Intel Plans To Slash Over 20% Of Workforce As Lip-Bu Tan Carries Out Major Restructuring: Report

Higher tariffs may hinder a recovery in the PC market for the rest of the year, potentially impacting Intel, which is relying on on-device artificial intelligence features and a new Windows cycle from Microsoft Corporation MSFT to boost demand in its key market, the report noted, citing according to investors and analysts.

“Demand for older-generation chips is a flashing macro signal,” stated Michael Ashley Schulman, chief investment officer at Running Point Capital, adding, “In a shaky economic climate, ‘good enough’ beats bleeding edge.”

Why It’s Important: Intel reported first-quarter revenue of $12.67 billion, surpassing analyst expectations of $12.3 billion. The chipmaker also reported adjusted earnings of 13 cents per share, exceeding the anticipated 1 cent per share.

For the second quarter, Intel projects revenue between $11.2 billion and $12.4 billion, compared to the estimated $12.84 billion. The company is forecasting a second-quarter loss of 32 cents per share, higher than the expected loss of 16 cents per share.

Price Action: Intel’s shares climbed 4.37% on Thursday, finishing at $21.49. However, the stock fell 5.12% in after-hours trading, dropping to $20.39. Year-to-date, the chipmaker has seen a 6.28% gain, according to Benzinga Pro.

Intel currently holds a growth score of 3.61% in Benzinga Edge Stock Rankings. Click here to see how it stacks up against other leading semiconductor stocks.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.