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Intel continues to suffer

by on09 May 2019

Poor growth for three years

Chipzilla bigwigs predicted only modest profit growth over the next three years, confirming that it is falling behind its big rivals.

To be fair, Intel still dominates the market with 90 percent share of PCs.  It is just that is not really where the money is as PC sales have stagnated, it has expanded into data centre processors, memory and networking chips.

But that puts it as a smaller player in a bigger market. The company said it expects to have just 28 percent market share by 2023, or about $85 billion in sales in a $300 billion addressable market for the chips it makes, according to the company’s forecast.

Chief Executive Officer Bob Swan said the company sees revenue and earnings per share growth in the “single digit” percentage range over the next three years, with flat PC chip sales offset by “double-digit” percentage revenue growth in data centre chips.

Swan also said operating margins would remain relatively steady at 32 percent, but that gross margins would decline as the company ramps up its 10-nanometer chip-making technology, which makes chips faster by making their features smaller.

Intel shares dropped in late trading as executives gave the presentation and closed 2.5 percent lower at $49.24.

Swan gave the long-term outlook less than two weeks after Intel cut its 2019 sales forecast, citing weak data centre sales in China.

“We let you down. We let ourselves down”, Swan said of the quarterly results last month.

Swan told investors the primary driver of gross margin pressure was the transition to new chip-making technology. Intel struggled with delays for its 10-nanometer technology, losing its lead in making the smallest chips to TSMC. Intel plans to launch 10nm chips for high-end PCs later this year and for servers early next year.


Last modified on 09 May 2019
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