Patna, Oct 25 :
Intel Corp on Thursday beat Wall Street estimates for third-quarter revenue and profit and raised its full-year revenue forecast, powered by sales to data centers and easing concerns about slowing demand during the US-China trade war. The chipmaker’s shares rose 3.5 per cent to USD 54.08 in extended trading. The results came as a relief to the industry after dour forecasts from major chipmakers Texas Instruments Inc and Xilinx Inc earlier this week. After years of acquisitions outside its core area of processing chips under previous leaders, Intel under Chief Executive Bob Swan has reined in spending, slowing investments in areas like memory chips and shedding struggling businesses.
Intel, based in Santa Clara, California, has doubled down on its core markets such as personal computers and data centers, both of which beat analysts’ third-quarter expectations.
Chief Financial Officer George Davis said Intel anticipated most of the year’s data center spending would come in the second half because many customers bought chips in 2018 and took time to install them.
“Data center came back much more strongly than even we anticipated this quarter,” Davis said in an interview. “Cloud customers actually grew year over year, and last year was an extraordinary year.”
Cascend Securities analyst Eric Ross said Taiwan Semiconductor Manufacturing Co Ltd (2330.TW), which supplies some of Intel’s rivals, had also forecast strong data center demand, suggesting a broader market recovery.
“We’ve finally seen another major semiconductor company that sees the data center returning as a major driver, as we’ve seen in our measurements, and the electronics supply chain sees,” he said.
Intel has also been contending with a US-China trade war that led to tariffs on its chips. About USD 200 million of Intel’s third-quarter revenue came from Chinese data center owners purchasing chips sooner than they otherwise would have, likely out of trade concerns, Davis said.
But analyst Kinngai Chan of Summit Insights Group said he suspected much more of Intel’s results were driven by sped-up buying because of tariffs and that could slow sales during the fourth quarter of 2019 and first quarter of 2020.
“We think this could result in the supply chain inventory digestion” as Intel’s customers work through the chips they have bought, he said.
