Sat, Jan 27, 2024 page12

• Intel issues bleak forecast

  • Bloomberg
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  Intel Corp, the largest maker of computer processors, tumbled in late trading on Thursday after giving a disappointing forecast for this quarter, signaling that it continues to struggle to defend its once-dominant position in data center chips.

  Sales in the first quarter would be US$12.2 billion to US$13.2 billion, the company said in a statement.

  That compared with analysts’ average estimate of US$14.25 billion, according to data compiled by Bloomberg.

  

  Pat Gelsinger, Intel chief executive officer, stands behind wafers while discussing the company`s progress on its IDM 2.0 strategy and ambitious five nodes in four years goal at the Intel “AI Everywhere” launch event on Dec. 14 last year in New York.

  Photo: AP

  Profit would be US$0.13 a share, minus certain items, versus analysts’ projection of US$0.34.

  The outlook suggests that Intel CEO Pat Gelsinger still has a long way to go in restoring Intel’s former prowess.

  Although the chipmaker’s PC business is recovering, it has been losing ground in the lucrative market for data center chips. The company is also contending with weaker demand at units that make programmable chips and components for self-driving vehicles, as well as a fledgling foundry business.

  Intel shares fell more than 6 percent in extended trading following the announcement.

  The Santa Clara, California-based company also said it was looking for ways to further tighten its belt.

  “We expect to unlock further efficiencies in 2024,” Intel chief financial officer David Zinsner said in the statement.

  Intel’s gross margin would be 44.5 percent this quarter. That compared with analysts’ average estimate of 45.5 percent.

  The measure is an indicator of how productive Intel’s multibillion-dollar factory network is. Prior to the onset of its current problems around 2019, Intel typically reported profitability of more than 60 percent.

  Last quarter, earnings came in at US$0.54 a share on sales of US$15.4 billion. Analysts had estimated earnings per share of US$0.44 and revenue of US$15.2 billion.

  Data center sales were US$4 billion, falling short of the average projection of US$4.08 billion. Client computing, Intel’s PC chip business, had sales of US$8.84 billion. That compared with an estimate of about US$8.42 billion.

  Intel has said that the PC market is emerging from an inventory glut and its largest customers are returning to ordering parts.

  Total PC shipments should rise to about 300 million units a year, Gelsinger has said, aided by demand for new machines that are better able to handle artificial intelligence (AI) software and services.

  In servers, where Intel once had a market share of more than 99 percent, the company is facing more competition and a shift in spending patterns.

  The frenzy of spending on AI hardware has not done much to help Intel. Most of that money has gone toward so-called accelerator chips made by Nvidia Corp. Those components are better able to handle the massive data requirements of developing AI models.

  However, Intel has its own accelerator, called Gaudi, and an improved version should help the company compete, Gelsinger said.

  He is also pushing Intel into the foundry business. As part of that expansion, the company is spending heavily on a network of plants around the world, aiming to meet rising demand.

  Intel has yet to go public with the names of any of the large customers it has lined up for this project.
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