Intel Corp delivered a revenue forecast that shattered Wall Street estimates as booming data center spending fuels a long-awaited turnaround.Sales would be US$15.8 billion to US$16.8 billion in the third quarter, the company said on Thursday.Even the low end of that range would easily clear the US$15.1 billion average analyst estimate.
Intel headquarters is pictured in Santa Clara, California, on Thursday.
The outlook underscores Intel’s gains with data center customers, which are clamoring for chips to satisfy demand for artificial intelligence (AI) computing. Sales in that segment soared 59 percent last quarter, more than double the pace of Intel’s overall revenue.Intel would still need to deliver over the longer run, but the latest results are a good sign, Seaport Group analyst Jay Goldberg said.
“You have the near-term momentum to carry you into the longer-term fundamentals,” Goldberg said in an interview on Bloomberg Television.Intel chief executive officer Lip-Bu Tan (陳立武), who took the reins last year, is working to position Intel as a key beneficiary of AI spending.Although Nvidia Corp remains the dominant provider of accelerator chips, which help develop and run AI models, the industry’s broader build-out has fueled demand for a range of semiconductors. That includes Intel’s central processing units (CPU).In data centers, “the CPU is taking off,” Tan said in an interview. “Demand is outpacing our increasing supply, and so those are good problems to have.”Intel also is making progress in improving its production, Tan said.That is helping it fill more orders and increasing the chances that other companies would choose to use Intel for outsourced production.Tan declined to discuss specific customer deals, beyond saying there are “multiple engagements.”The company should begin to show progress on that front by early next year, he added.The Santa Clara, California-based company is boosting its spending on equipment to ensure it can meet demand, for its own chips and products that it manufactures for others.Intel chief financial officer Dave Zinsner said the company, which had earlier planned to reduce capital spending from a year earlier, is now committed to raising its budget — something it would likely do next year as well.Spending would amount to about US$20 billion this year, Zinsner said.In the second quarter, revenue rose 25 percent to US$16.1 billion. Profit was US$0.42 a share, excluding some items.Analysts had estimated sales of US$14.4 billion and earnings of US$0.21 on average, data compiled by Bloomberg showed.The company is seen as pivotal to bringing chip manufacturing back to US soil, following decades of it shifting to Asia.Intel’s gross margin, the percentage of revenue remaining after deducting the cost of production, widened to 40.4 percent last quarter on an adjusted basis. That was up nearly 13 percentage points from a year earlier, but profitability remains well below the level when Intel was at the height of its powers.In those years, the chipmaker regularly reported margins north of 60 percent.The Intel Foundry Services division — the company’s factory unit — had sales of US$5.8 billion, up 31 percent. The unit relies almost exclusively on Intel product divisions for orders, although it is seeking outside customers.The PC chip division had revenue of US$8.9 billion and the data center unit posted sales of US$6.3 billion.
