SAN JOSE, Calif. – In the midst of a bull year for semiconductors overall, Intel reported strong results and lifted its forecast, thanks in part to better than expected sales of PC processors. Revenue hit $14.8 billion, up 9 percent from the same period last year, net profits jumped 111 percent to $2.8 billion and the company now expects 2017 revenues of $61.3 billion at 61 percent gross margins.
The PC group, which still makes up 60 percent of Intel’s sales, grew 12 percent to $8.2 billion in the quarter. While volumes were only up in modest single digits, sales continue to shift toward gaming PCs and thin-and-light notebooks that command a premium.
Intel’s data center group, its second largest unit, saw sales rise 9 percent to $4.4 billion. Sales to cloud computing giants rose 36 percent while sales to business users sagged, as companies continued the trend of outsourcing computing.
In the midst of a boom in memory prices, Intel’s flash group rose to be its third largest division growing a whopping 58 percent to a still relatively small $874 million. Unfortunately, the group will not be profitable until next year because Intel is ramping both its 3DXP chips in its Lehi, Idaho joint venture fab with Micron as well as 3D NAND in its own Dalian, China fab.
Intel aims to shift its mix of flash sales more to 3DXP as it qualifies new products next year. The chips help differentiate Intel from much larger NAND makers such as rival Samsung, said chief executive Brian Krzanich
Rounding out results, Intel’s IoT group jumped 26 percent to $720 million in sales while the former Altera FPGA division fell 5 percent to $440 million.
Losses narrowed at Intel’s relatively small memory group as NAND products became profitable in the quarter. Click to enlarge. (Images: Intel)
Intel is now sampling 10nm chips and “yields are continuing to improve pretty much right in line with [traditional] ramps rates,” said Krzanich. “It’s a new technology so there are always some problems to solve, but we’re pretty comfortable with where we are at now,” he added.
First 10nm processors for PCs should ship early next year. Higher end parts will come later in the year in a traditional Intel ramp, he said. Intel still intends to spend $12 billion on capital equipment this year, $2.5 billion of it for 3DXP and Dalian flash products.
Intel sold some of its stake in lithography maker ASML, a move that will help fund its acquisition of automotive specialist Mobileye, expected to close in the third quarter. Mobileye is expected to contribute about $200 million to Intel revenues in its first quarter as part of the x86 giant.
The deal is one part of Intel’s shift from a PC- to a data-centric company, said CFO Bob Swan. Non-PC revenues for the company grew at 16 percent, he added.
FPGAs, Intel’s smallest division, was the only segment that did not report growth. Click to enlarge.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times