PALO ALTO, US – Chipmaker Intel has disappointed Wall Street with its latest earnings outlook, saying its customers are struggling to assemble laptops amid a global component shortage and a Chinese crackdown video games were hurting data center sales.
For the three months ended September, Intel reported revenue of $ 19.2 billion, up 5% year-over-year, and net profit of $ 6.8 billion. dollars, up 60%.
However, its biggest revenue generator – Client Computing Group (CCG) business, which includes sales of personal computer chips – was down 2% year-over-year. Intel said revenues were lower due to declining laptop computer volumes.
The results come against a backdrop of struggles for market share. Earlier this week, Apple announced a new Mac laptop powered by its latest-generation internal chips as it continues its two-year transition from Intel processors for its line of computers.
“Note that excluding the impact of our decline in our Apple processors and modems business, CCG’s revenue is up about 10% year-over-year,” said CFO of ‘Intel George Davis during the results call Thursday.
Intel’s data center business reported $ 6.5 billion in revenue in the September quarter, up 10% year-on-year but below analyst estimates.
The US chipmaker attributes Beijing’s crackdown on the gaming industry, which is a key customer for the company’s data center activities.
“As you may have seen, there have been regulatory issues regarding gaming in China… and all cloud providers are adjusting their offerings to meet this new regulatory environment,” said the CEO of Intel, Pat Gelsinger, adding that the company expects China’s This problem will continue to weigh on its data center business in the fourth quarter.
“We have a particularly high market share in the Chinese cloud market, so as it recovers, we expect a nice recovery in this business area for us, and we expect a return to normal. ‘next year,’ Gelsinger said.
For the full year 2021, Intel is forecasting revenue of $ 77.7 billion, lower than the record revenue of $ 77.9 billion recorded last year, in part due to China’s underperformance.
“For the DCG [data center group], we expect a decrease in annual turnover [to the] low to average year-over-year numbers, due to a more competitive environment in line with our expectations, weaker demand from China and supply constraints for components across the world ‘industry,’ Davis said.
Davis has announced his intention to retire in May 2022. Intel has yet to name his successor.
Intel shares fell more than 8% on Thursday after trading hours.
Amid the challenges, Intel is betting on its foundry business for long-term growth.
In September, the company opened two chip factories in Arizona as it ramps up competition with Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker.
“Intel remains the only global company committed to building a state-of-the-art foundry in the United States and Europe, for customers around the world,” Gelsinger said Thursday.
In an interview with CNBC, Gelsinger said he expects the semiconductor shortage to continue until 2023.
“We’re in the worst now. Every quarter of next year we will gradually improve, but they won’t have a supply-demand balance until 2023,” he said.