Intel Corp expects revenue to rise by just under 2 percent this year, with growth picking up in later years as CEO Pat Gelsinger pursues a turnaround of the once-dominant chipmaker.
Sales are forecast to amount to US$76 billion this year, before climbing by a mid to high-single-digit percentage by next year and 2024, the company told an investor event in San Francisco.
Analysts have predicted growth of 1 percent this year to US$75.1 billion, with sales ticking up 3 percent next year and 8 percent in 2024.
Photo: Reuters
Intel called for earnings of US$3.50 a share this year, excluding some items. That too was slightly higher than the estimate of analysts, who have predicted US$3.44.
“I feel confident in our plan to accelerate and deliver,” Gelsinger said.
So far, Intel has struggled to capitalize on booming demand for chips — a surge fueled by the work-from-home trend and the spread of semiconductors into a wider range of devices. While the chip industry’s sales gained 26 percent last year to a record US$556 billion, Intel posted a 4 percent decline.
Meanwhile, its rivals have been flourishing. Advanced Micro Devices Inc’s (AMD) sales grew 68 percent last year and Nvidia Corp posted a 61 percent gain. Those companies are on course to expand sales more than 25 percent again this year, according to analysts’ projections.
The biggest chunk of Intel’s sales still comes from the personal-computer market, where its processors remain the most important component of the majority of laptops and desktops. Last year, PC shipments climbed back to levels not seen for a decade, helped by the shift to remote work.
However, analysts have expressed concern over whether that would continue. Moreover, Intel is facing fiercer competition from AMD, and some customers — such as Apple Inc — are switching to their own chips.
Gelsinger took over the top spot at Intel a year ago, rejoining the chipmaker after about a decade’s absence. The company’s leading executives took to the stage to explain how they would restore Intel’s dominance in the semiconductor business.
Gelsinger, 60, outlined a plan to spend tens of billions of US dollars on new factories that would put the company in direct competition with outsourced manufacturing providers such as Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co.
At the same time, he is shaking up Intel’s internal production technology operations and is targeting a return to leadership by 2025. The company is also entering new markets, such as graphics chips, where it will go head to head with AMD and Nvidia.
Chief financial officer Dave Zinsner promised increased financial discipline, as Intel tries to win back market share and enter new industries. After its spending on new plants peaks over the next two years, he expects gross margin to be in the 54 percent to 58 percent range.
That would still be below Intel’s historical highs of more than 60 percent, but the company’s push into outsourced chip production would weigh on margins, he said.
The company expects revenue growth to hit 10 to 12 percent by 2025 and 2026, when its “investment phase” is over.
Intel said that its graphics chip business could approach US$10 billion by 2025.
Meanwhile, its outsourced chip business is still in the early stages — “just beginning,” Gelsinger said.
Intel this week announced the US$5.4 billion acquisition of Tower Semiconductor Ltd to help shore up those operations.
Investors have been skeptical. Against that backdrop, Gelsinger assured shareholders that his comeback is taking hold.
“The Intel turnaround train is leaving the station and I hope you all get on board,” he said.
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