The ongoing Sino-U.S. trade war, while posing a significant threat to Intel's revenue from its crucial Chinese market, has ironically become an unexpected catalyst for demand in the chipmaker's older generation of personal computer and server processors, according to company executives.

Amidst a deteriorating global economic outlook and the looming specter of increased prices triggered by U.S. President Donald Trump's widespread tariffs and China's retaliatory measures, customers are reportedly turning to more affordable, older-generation chips.

"In client, we are seeing strong demand on older-gen parts and in data center as well," stated Michelle Johnston Holthaus, the chief executive of Intel's products unit, during a post-earnings call. Her remarks pertained to the divisions responsible for supplying chips for personal computers and servers. "Macroeconomic concerns and tariffs have everybody hedging their bets," she elaborated.

The Santa Clara, California-based tech giant issued a cautious forecast for the June quarter. However, it notably surpassed Wall Street's projections for first-quarter sales as customers proactively built up their chip inventories in anticipation of substantial tariffs.

While chips have so far been exempt from direct U.S. tariffs, Intel faces a considerable risk from China's retaliatory tariffs on American imports. According to a notice issued by the state-backed China Semiconductor Industry Association (CSIA) earlier in April, chips manufactured in the U.S. are slated to face levies of 85% or even higher.

Intel's finance chief, David Zinsner, voiced significant concerns regarding the macroeconomic environment stemming from the trade tensions. "The very fluid trade policies in the U.S. and beyond, as well as regulatory risks, have increased the chance of an economic slowdown with the probability of a recession growing," Zinsner cautioned. "We will certainly see costs increase."

Analysts and investors suggest that escalating tariffs could potentially hinder a recovery in the PC market for the remainder of the year, which could negatively impact Intel. The company is heavily relying on the integration of on-device artificial intelligence features and the anticipated refresh cycle driven by a new Microsoft Windows operating system to revitalize demand in its most vital market.

"Demand for older-generation chips is a flashing macro signal," commented Michael Ashley Schulman, chief investment officer at Running Point Capital. "In a shaky economic climate, 'good enough' beats bleeding edge."

This inclination towards older processors among clients could also cast a shadow over the prospects for Intel's array of new PC chips specifically designed for AI-enabled personal computers.

Bob O'Donnell, chief analyst at Technalysis Research, told Reuters that the lower prices associated with older chips are impacting Intel's profitability and are likely to decelerate the widespread adoption of more advanced chips tailored for AI PCs. This unexpected surge in demand for older technology underscores the far-reaching and often unpredictable consequences of the ongoing trade dispute on the global technology landscape.