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Intel defies gloom with data centre-driven gains

Written by Fri 24 Jan 2020

Data Center Group financials beat analyst expectations

Intel has posted solid quarterly and full-year revenue forecasts fuelled by an uptick in data centre chip sales last year.

The chipmaker’s sales in Q1 2020 and the year as a whole are set to outpace analyst expectations and wider industry trends, thanks to surging demand from public cloud providers for the company’s server chips.

Intel ended 2019 with a 48 percent spike in revenue from cloud providers, despite concerns the company was losing ground in the processor market to rivals and well-documented struggles with CPU production.

The company reported $20.2bn revenue for the fourth quarter in 2019, an eight percent year-on-year gain, taking revenue to $72bn for 2019, a two percent rise.

Although Intel’s PC-focused business pocked larger revenues ($10bn) than the company’s data centre business ($7.2bn), the server-side unit is expected to grow faster (2 percent) than the computer chip division (flat).

“In 2019, we gained share in an expanded addressable market that demands more performance to process, move and store data,” said CEO Bob Swan. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations.”

In the earnings call, Swan said Intel is overcoming the production issues that have delayed the roll-out of its new 10nm chips. “We’re ramping 10nm the second half of the year and we’re investing in 7nm,” Swan said. In response to the company’s broader struggle to meet demand for its chips, Swan said Intel will add 25 percent more wafer capacity this year.

Although Intel dominates the server processor market, competition with rivals AMD has intensified as of late. AMD has aggressively undercut Intel and is increasingly the first to bring new innovations to market, such as the advanced 7nm chips the company released last year. In addition, Amazon has begun producing chips of its own. Intel said increasing competition will squeeze growth in the second half of 2020.

Written by Fri 24 Jan 2020


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