Intel Corp gave bullish quarterly and full-year revenue forecasts, driven by a surge in demand for chips that power large cloud-computing centers. The shares jumped as much as 7.8 percent in late trading.
Sales in the current quarter and this year will be well above what analysts had predicted and are outpacing normal industry trends, the chipmaker said on Thursday. Fourth-quarter revenue and profit also topped Wall Street’s highest estimates. As the biggest provider of server chips, Intel is benefiting from a rush to build capacity in data centers operated by companies such as Alphabet Inc’s Google, Facebook Inc and Amazon.com Inc’s AWS.
“We’re well ahead of our expectations in the quarter and it’s continuing into this year,” Intel chief financial officer George Davis said in an interview. “That’s just a great dynamic.”
Revenue from cloud-service providers, which offer computing power and storage via the Internet, surged 48 percent in the fourth quarter, fueling a gain in sales of the company’s most lucrative chips.
The data center unit reported a sales increase of 19 percent to US$7.2 billion in the fourth quarter, while PC-chip sales gained 2 percent to US$10 billion. The company’s programmable-chip unit was the only division to post a decline. Sales at the Mobileye unit, which makes chips used to help vehicles pilot themselves, grew 31 percent to US$240 million.
Overall revenue in the current period will be about US$19 billion, and profit will be US$1.23 a share, excluding certain items, Intel said. That compares with average analysts’ projections for US$17.2 billion and US$1.04 a share. Sales in 2020 will be about US$73.5 billion, the company said late on Thursday in a statement. Analysts were looking for US$72.2 billion on average, according to data compiled by Bloomberg.
The company’s annual forecast implies growth will abate in the second half of the year, Davis said. Big purchases from data-center owners tend to come in lumps, followed by slower periods when the components are being built into computers.
“The hard part is forecasting when they’re going to slow down and digest,” he said.
Fourth-quarter sales rose 8 percent to US$20.2 billion, the Santa Clara, California-based company said. Analysts on average had predicted US$19.2 billion. Net income was US$6.9 billion, or US$1.58 a share, compared with estimates for US$1.23 a share. Gross margin was 58.8 percent in the quarter.
The largest US chipmaker will increase spending on new plants and equipment to US$17 billion in 2020 in part to boost production to a point where it’s not only able to fill all customer orders, but build inventory, Intel chief executive officer Bob Swan said on a conference call. After again failing to meet all demand in the fourth quarter, avoiding a repeat of that mistake is one of his biggest priorities, he said.
The company’s struggles with its move to advanced 10-nanometer production are beginning to ease, Swan said. Intel plans to have server chips built with that technique available in the second half.
Demand for PCs held up well in the recent period, Davis said. Global PC shipments rose 2.3 percent from a year earlier in the December period as companies upgraded to a new version of Microsoft Corp’s Windows operating system, according to research firm Gartner Inc. Intel expects the market this year for PCs to be flat from last year as that replacement cycle comes to an end.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
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