Chip giant Intel (NASDAQ:INTC) has talked a lot about its attempted transformation from a so-called "PC-centric" company to a "data-centric" company. Its "data-centric" businesses include its fast-growing data center group (DCG), its non-volatile memory solutions group (NSG), its programmable solutions group (PSG), and its Internet of Things group (IoTG). 

Although Intel's PC-centric revenue has become a smaller part of the company's overall business, investors need to understand that Intel's financial performance still is significantly tied to the health of the PC market, as well as its ability to capitalize on that market.

An Intel Core i9 chip.

Image source: Intel.

Let's take a more quantitative look at that dependence.

Recapping 2017

In 2017, Intel reported that its client computing group (CCG) -- the company's PC-centric business unit -- generated $34 billion in sales, making up a little over 54% of its total revenue. Although that revenue was up 3.3% year over year, the company's data-centric businesses collectively outgrew CCG. As a result, CCG revenue, as a percentage of the company's total, was down slightly from 55.4% a year earlier.

Last year, Intel's CCG turned in an eye-popping $12.92 billion in operating income -- up 21.4% year over year -- making it by far the largest contributor to the company's total operating profit. Intel's DCG segment, which is the company's second largest by revenue, turned in almost $8.4 billion in operating income, making it Intel's second-largest contributor to operating profit. 

The story so far in 2018

Over the course of 2018, during which time Intel's CCG and DCG have outperformed the company's initial expectations going into the year, DCG's contribution to the company's financial performance has grown, while CCG's -- though still significant -- has lessened. In the first half of 2018, CCG turned in $16.95 billion in sales, up almost 4.7% year over year from the first half of 2017. However, the company's overall revenue during the first half of 2018 was up 11.7%, so CCG revenue as a percentage of the total dropped year over year from 54.8% in the first half of 2017 to 51.3% in the first half of 2018. 

What's interesting is that Intel's operating income excluding its "all other" category totaled nearly $9.4 billion in the first half of 2017, of which CCG made up 64.4%. Those figures were almost $11.9 billion and 50.7%, respectively, in the first half of 2018, thanks mostly to a surge in DCG operating income to $5.34 billion in the first half of 2018 from $3.15 billion in the first half of 2017. (It also helped that operating income improved in the IoTG, PSG, and NSG segments while CCG's operating income was down a smidgen.)

Dependence declining, but still important

It's clear that Intel's dependence on the PC market is declining as its other business segments are outgrowing its PC business. That doesn't mean, though, that investors should totally discount it. PCs still account for a large portion of Intel's revenue and operating profit, and as CFO and interim CEO Bob Swan explained on the company's second-quarter earnings call, the PC business "continues to be an extremely important source of [intellectual property], scale, and cash flow for our company."

Intel announced that it will report its third-quarter earnings results on Oct. 25, 2018.  I'll be sure to give an updated look at the company's dependence on the PC market after the numbers come out.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.