Chip maker AMD saw losses widen in the first calendar quarter as the PC market went through a painful sales drought.

A slump in demand for microprocessors saw quarterly sales sink by 21 per cent to reach $1.18bn, though this was still better than the previously projected result of $978 million.

AMD reported that it lost $416 million during the three months ended march 31. The California-based company had dropped $364 million during the same period last year.

Though the firm had been stung by heavy losses, it had markedly outperformed previous projections, offering a sign that the PC slump may be in its final days. Last week, Intel CEO Paul Otellini claimed that PC sales had “bottomed out”, and that the market will climb back up.

AMD, however, was not so optimistic. “I've heard some say we've hit bottom,” said Dirk Meyer, company CEO. “I don't know how someone could say we've hit bottom in the current economic climate.”

AMD had poured more cold water on Intel’s current optimism, saying that “the economy is still weak, making it very difficult to forecast end-user demand.” Meyer said revenue will be down in the second quarter; a projection that deflated analysts’ more positive expectations.

The guidance raised questions on whether AMD had projected lower sales because it expected to lose market share to Intel.

AMD shares fell 5 percent following the report.