Intel Corp. Shares sank on Thursday as the company reported third-quarter sales that missed expectations, Chief Executive Officer Pat Gelsinger told Reuters after a lack of ancillary chips needed to make full-fledged computers was the company’s flagship processor chips. stopping sales.
Company leaders also said margins would remain low for several years and that it would spend heavily to improve its chip factories. Santa Clara, Calif.-based Intel, the world’s largest maker of central processors in PC and data center servers, fell 9% in expanding trading.
Gelsinger said Intel has addressed the shortfalls facing its internal manufacturing operations, but a lack of other chips, such as power management chips and WiFi chips, has prevented shipping PCs and servers to its customers, leading to a shortage of Intel’s chips. The need has reduced.
“This is a direct result of the semiconductor industry’s overall supply challenges,” Gelsinger told Reuters in an interview.
Gelsinger’s plan to remake the company by fixing its internal manufacturing issues while opening its doors to external customers has largely gone down well with investors, with shares rising nearly 11% this year ahead of Thursday’s results. happened.
Giving an unexpected long-range forecast on an investor call on Thursday, Intel said it expects at least $74 billion in revenue in 2022, well above analyst estimates of $73 billion. But the company also plans to spend heavily, saying that capital expenditures could range from $25 billion to $28 billion in 2022 and higher in subsequent years.
At an operational level, Intel said gross margin is expected to be between 51% and 53% over the next two to three years, down from the 56.2% that analysts expect by 2021, according to Refinitiv data.
Meanwhile, rivals like Nvidia Corp. and Advanced Micro Devices that take advantage of external contract makers to make faster chips, are eating into Intel’s market share.
Intel missed estimates for its data center segment, with sales of $6.5 billion compared to estimates of $6.5 billion, according to Refinitiv Data. Gelsinger told Reuters that some of the data center results were due to Chinese cloud computing vendors – Intel’s major customers – adjusting to new regulations from the Chinese government.
Atlantic Equities analyst Ianjit Bhatti said the lower sales to cloud computing groups reflect an increase in market share by AMD. AMD and Nvidia’s shares were up slightly after Intel’s results.
Intel reported adjusted sales of $18.1 billion for the third quarter ended September, a missing estimate of $18.24 billion, according to Refinitiv’s IBES data. Intel reported an adjusted profit of $1.71 per share, compared to Wall Street’s estimate of $1.11 per share, according to Refinitiv data.
Intel’s chief financial officer George Davis, whom Intel was set to retire in May 2022, said on Thursday that about 14 cents of the outperformance came from demand for higher-margin products and operating profit, while the rest came from tax restructuring-like Came from one-time items.
Intel forecast fourth-quarter revenue slightly above Wall Street’s expectations. According to Refinitiv’s IBES data, the company expects revenue of about $18.3 billion in the fourth quarter, compared to analysts’ average estimate of $18.25 billion.
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