Intel gives upbeat forecast on demand for PC chips; shares jump

Andrew Cummings
January 23, 2021

Intel also forecast first-quarter revenue and profit above Wall Street expectations, continuing to benefit from pandemic demand for laptops and PCs that have powered the shift to working and playing from home.

Intel's quarterly results, released before the market closed on Thursday, initially sent the shares higher.

US chip maker Intel's logo on a building near Tel Aviv, Israel, on December 15, 2019. They later fell about 1.9 per cent in after hours trading.

Intel Corp. had to act fast Thursday afternoon when it discovered that an infographic from its unpublished quarterly report had been circulating outside the company.

For 2020, Intel posted record annual sales of $77.9 billion, up from $72 billion in 2019, exceeding analysts' expectations.

The infographic was accessed and exfiltrated from Intel's corporate PR newsroom website as the company's Chief Financial Officer George Davis told the Financial Times - an infographic containing information related to the Q4 & FY 202o earnings statement is now available on Intel's newsroom. Bernstein analyst Stacy Rasgon questioned whether Gelsinger, now the chief executive of VMware Inc who previously spent 30 years at Intel and announced his intention to return just last week, has had sufficient time to dig into the issue.

That, combined with investments in other aspects of chip development, including packaging technologies, will allow the company to deliver the "best products for our customers in every category that we participate in", according to Gelsinger. Data center chip operating margins were 34% in the quarter, down from 48% a year earlier.

The U.S. chip giant has been under increasing pressure to outsource production to foundries such as its longtime partner Taiwan Semiconductor Manufacturing Co. after the company ran into delays introducing its own 7-nanometer chip manufacturing technology. Last fall, Intel said that if its factories can not reliably deliver new chips the company may outsource its leading-edge chips to a contract manufacturer - presumably either Taiwan Semiconductor Manufacturing Co. or Samsung.

Intel did not name companies it might license from but TSMC and Samsung are its only competitors for high-end chips. Shares of some Intel suppliers also dropped, with Screen Holdings Co. down 3.7 per cent and Tokyo Electron Ltd. declined 1.6 per cent. Intel's Data Center Group (DCG) was its second-largest business with $6.1 billion in revenues, but that was down 16 percent YOY.

Revenue in the period ending in March will be about US$17.5 billion, the Santa Clara, California-based company said.

Intel said it expects sales of $18.6 billion in the current quarter, down from sales of $19.8 billion in the first quarter of 2020.

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