SANTA CLARA, Calif. -- Intel Corp. is experiencing greater-than-expected unit demand for microprocessors--and even spot shortages for parts--in what is turning out to be a surprising quarter for the chip giant.
At a time when the IC industry is supposed to be in the summer doldrums, Intel's logic fabs are running at full capacity, due to unexpected demand for processors, chip sets, and motherboards, according to the company. But on the down side, the company's communications business, especially flash memories, remains weak, it said.
Still, Intel today (Aug. 23, 2003) raised its forecast for the third quarter of 2003 ( see today's story ). Intel expects revenue to be between $7.3-to-$7.8 billion in the third quarter, as compared to the previous range of $6.9-to-$7.5 billion.
Intel reported a profit of $896 million, or $0.14 a share, on sales of $6.8 billion, in the second quarter of 2003. It reported a profit of $686 million, or $0.10 a share, on sales of $6.5 billion in the third quarter of last year.
Andy Bryant, chief financial officer for the Santa Clara-based company, attributed the new forecast to "unexpected" unit demand for mobile, desktop, and server processors. However, the flash-memory business remains weak, Bryant said.
Intel is seeing "stronger-than-expected revenues around the world and stronger-than-expected revenues in the channels," he said. "July and the first couple of weeks in August were strong," he said in a conference call today.
The company is also experiencing spot shortages of undisclosed parts. "We've had some spot shortages," he said. "There have been spot constraints in the first part of the quarter."
The demand is causing its logic fabs to run "at full capacity," he said. The Intel CFO said the company has no plans to boost its capital spending. It is installing new equipment in its plants and has 300-mm capacity coming on line, he said.
Bryant attributed the company's new and positive forecast to economic factors, rather than a single data point in the marketplace. "The economic tide is riding a little bit," he said.
It's still too early to declare a recovery in the IC business, Bryant said. "We've seen growth this quarter," he said. But the question is whether or not the momentum "will continue to build," he added.