Intel profits drop in Q3 on weak PC market, alleviated by higher chip prices, server & IoT markets

Intel profits dropped 6.3 percent year-over-year in the third quarter, impacted by a diminished market for desktop and laptop PCs — though the company was buoyed somewhat by things like higher selling prices for chips, and rising sales in the server market.

The company recorded $3.11 billion in net income, down from $3.32 billion, and $14.47 billion in revenue, a decline from $14.55 billion, according to a results statement. Sales of desktop chips fell 15 percent, while notebook processors didn't fare much better at 14 percent.

The blow was softened by higher prices for new Skylake-series processors, and growth in the server and Internet of things (IoT) sectors. Sales of server processors rose 12 percent, while IoT revenue advanced almost 10 percent, albeit to $581 million. Intel also reduced subsidies to PC makers building tablet-like PCs.

Recent Gartner data indicated that the global PC market continued to slide in the third quarter, shrinking 7.7 percent. Only Apple and Dell marked significant growth worldwide, though HP and Lenovo did make gains in the U.S.

Intel's problems may be linked to a variety of factors, including the increasing reliance of many people on smartphones and tablets instead of full-fledged computers. While Intel technically makes dedicated tablet processors, these have largely failed to catch on in a market dominated by the Apple iPad, as well as Android tablets capable of running on processors from companies like Nvidia or Qualcomm.

The company was also likely hurt by people waiting for the launch of Skylake, which began shipping to PC makers during the quarter.

On Tuesday Apple updated its iMac desktops with Skylake chips. The company also released its first 21.5-inch iMac with a 4K Retina display, and upgraded every 27-inch unit to 5K.