Intel Corp.
INTC -1.77%
recorded lower quarterly sales and earnings while revoking the full year outlook as the new CEO
Pat Gelsinger
accelerates efforts to get the US semiconductor giant back on track amid a global chip shortage.
Intel announced Thursday that first quarter revenue fell 1% to $ 19.7 billion, which equates to net income of $ 3.4 billion. Excluding the upcoming sale of its memory business and other items, Intel said sales were $ 18.6 billion and net income was $ 5.7 billion. According to analysts polled by FactSet, Wall Street expects an average of $ 18.6 billion in revenue for the first quarter and net income of $ 4.3 billion.
This is a crucial year for Intel. We are laying our strategic foundation and investing to accelerate our development and capitalize on the explosive growth of semiconductors that power our increasingly digital world. Mr. Gelsinger said in a statement about Intel’s first quarter results with him at the helm.
Mr. Gelsinger this month presented an ambitious strategy for Intel to become a major job chip maker and manufacture semiconductors to meet internal requirements. The plan calls for a $ 20 billion commitment to build two new semiconductor plants in Arizona.
The CEO, who has been on the job since February, has also pledged to quickly deploy manufacturing capacity to one to alleviate the major shortage of chips that has disrupted a number of industries, particularly automotive manufacturing.
The White House met with executives from the chip and other industries this month to see what action it should take to address the shortage and strengthen the domestic chip building industry. President Biden had previously pledged to address the chip shortage and added $ 50 billion for the semiconductor industry to his massive infrastructure spending package.
Intel’s decline in sales is broadly despite the strong demand for chips. Vivek Arya, a semiconductor analyst with Bank of America, said ahead of Intel’s results that several factors are holding back the company. This includes the growing demand for PCs mainly focused on lower-priced devices like Chromebooks
Apple Inc.
AAPL -1.17%
puts Intel out of action for in-house chip designs for some of its devices. And after a strong year of data center spending, spending should grow at a slower pace this year, he said.
Mr. Arya anticipates Intel’s revenue growth will follow that of the broader sector he predicts will grow by around 15% this year.
Mr. Gelsinger is trying to rebuild a company that has suffered repeated setbacks in the manufacture of its most advanced chip and has lost ground to Asian rivals. Mr Gelsinger said last month the company is making progress on its latest chips, despite analysts saying they want more details.
Intel has also announced it will be stepping up the outsourcing of some chip productions to keep up, said er.
The company is also facing increasing competition.
Nvidia Corp.
NVDA -3.32%
« ???? that overtook Intel as America’s Most Valuable Chip Company last year » ???? and
Advanced Micro Devices Inc.
AMD -3.12%
Have taken market share. Nvidia also announced this month that it will sell central processing units for data centers, a market that Intel has long dominated. Intel presented an improved data center chip this month.
Intel’s efforts to become a contract chip manufacturer are not without their hurdles. The company has previously tried to enter this market with little success. And its main competitors
Taiwan Semiconductor Manufacturing Co.
TSM -1.77%
and
Samsung Electronic Co.
are preparing their own multi-billion dollar spending plans for expansion. TSMC last week raised its investment plan for this year to $ 30 billion while increasing its revenue forecast. Samsung has planned investments of 116 billion US dollars to diversify chip production by 2030.
According to Gelsinger, Intel is planning additional chip investments. The company could benefit from bipartisan support from US chipmakers in Washington. For example, Intel is offering a Pentagon contract to finance domestic chip manufacturing and meet government security requirements.
Intel expects sales of $ 18.9 billion for the current quarter. The company also said total annual sales should hit $ 77 billion, up $ 500 million from last month’s release.
Ref: https://www.wsj.com
