Intel's desktop and mobile computing business generated revenues of $7.4 billion in Q1 2015, down eight per cent year-on-year.
The chip maker's CEO Brian Krzanich said this was due to lower than expected demand for business desktop PCs. His comments come after analysts Gartner and IDC revealed a drop in PC sales during the first quarter of this year.
Intel's software and services businesses generated revenue of $534 million, down three per cent year-on-year.
However, these declines were offset by growth in data centre revenue of $3.7 billion (up 19 per cent year-on-year) and Internet of Things (IoT) revenue of $533 million (up 11 per cent year-on-year). This announcement follows news in January that Intel hit record revenues in 2014 with strong growth in IoT.
Overall, Intel reported first quarter revenue of $12.8 billion and operating income of $2.6 billion - an increase of four per cent year-on-year.
"Year-over-year revenues were flat, with double-digit revenue growth in the data center, IoT and memory businesses offsetting lower than expected demand for business desktop PCs," said Krzanich.
"These results reinforce the importance of continuing to execute our growth strategy."
Going forwards, Intel expects to generate $13.2 billion in revenues during Q2 2015, with restructuring costs at $120 million and R&D costs at around $4.9 billion.
For the full-year 2015, Intel predicts revenue will be flat, with capital spending at $8.7 billion in total.