Intel Corp gave a disappointing forecast for sales this quarter, signaling lackluster year-end demand for PCs, servers and the chips that run them.
Revenue would be US$15.7 billion, with a margin of error of US$500 million, the company said in a statement on Tuesday.
Analysts had projected US$15.9 billion, the average of estimates compiled by Bloomberg showed.
Intel’s third-quarter sales reached a record, lifted by processor orders from PC makers that decided to shore up their chip supplies ahead of the holiday shopping season. So far, demand has not come surging back, meaning that customers will again pare orders as they work through those stockpiles of chips.
The world’s largest semiconductor maker also backed off an annual forecast for double-digit revenue growth in server chips for data centers and corporate networks, its most profitable business.
“We’re not going to raise the flag and say everything’s good again,” Intel chief executive officer Brian Krzanich said on a conference call.
The company’s third-quarter net income rose to US$3.38 billion, or US$0.69 per share, compared with US$3.11 billion, or US$0.64 per share, in the same period last year. Revenue rose 9.1 percent to US$15.8 billion.
Adjusted gross margin widened to 65 percent from 64 percent, Intel said.
The company’s client computing group, which sells PC chips, posted third-quarter sales of US$8.89 billion, a gain of 4.5 percent from the same period last year.
Demand for PCs will increase in the fourth quarter from the previous three months, in line with normal seasonal gains, the company said.
While the PC market is not getting worse, it is still shrinking. Worldwide shipments fell 3.9 percent in the third quarter, market researcher International Data Corp said earlier this month, a smaller drop than the decline of 4.1 percent in the second quarter.
Intel’s data-center group, which provides chips used in corporate networks and the large cloud-computing systems run by companies such as Google and Amazon.com Inc, posted revenue of US$4.54 billion, a year-on-year rise of 9.7 percent. The company had set an annual target of double-digit percentage growth for that unit — a prediction it missed in the first half.
On Tuesday, Krzanich said the unit would only achieve “high single-digit” percentage sales growth for this year.
Large customers who build their own servers have returned to ordering, with sales in the third quarter from cloud customers up 32 percent year-on-year, Intel said.
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