Bernstein analysts believe the US semiconductor correction has another quarter to go and that while Intel's (NASDAQ:INTC) expectations into year-end appear reasonably conservative, Advanced Micro Devices, Inc. (NASDAQ:AMD) is potentially a bit more aggressive.
The analysts note that CPU ASPs are now falling as Intel and AMD "take actions to clear the channel." They added that the "declines appear particularly extreme for AMD."
"Intel suggested further channel flush in Q2 but better than Q1, and 2H normalization likely (and both Intel and AMD seemingly guided for a bit of Q2 QoQ client growth)," they wrote.
While the current trajectory suggests we may have another quarter or two of channel correction to go, they believe normalization by Q3 or Q4 seems plausible.
"We note that consensus models INTC client down YoY through Q3 and only +8% YoY in Q4 (annualizing Q422 where PCs appeared "normal" and CPUs undershipped by >20%), hence pointing to reasonably conservative assumptions assuming PCs hold pre-COVID levels," the analysts wrote.
"Consensus models somewhat more aggressive AMD client growth into year-end (positive YoY in Q3 and up over 30% in Q4) though AMD is admittedly smaller and can swing around more, and the compare is easier."