Intel posts flat growth as data center chip business plummeted

Intel revealed that its revenue reached $18.6 billion during the first quarter of 2021 without achieving any growth as its data center chip business plummeted.
Intel business outlook 2021
Intel has generated $5.6 billion from data center business, Intel’s second largest revenue earner, during the first quarter. Revenue from data center business nosedived 20 percent due to its competition from AMD and others.

Intel’s revenue from client computing business increased 8 percent to $10.6 billion. Intel also raised its annual sales outlook on booming demand for personal computers. Intel said it expects 2021 adjusted revenue and profits of $72.5 billion and $4.60 per share.

The chipmaker forecast second-quarter adjusted revenue and profits of $17.8 billion and $1.05 per share.

Angelo Zino, senior equity analyst at CFRA Research, said he expects PC momentum to wane as COVID-19 vaccines roll out around the world and workers return to offices.

Intel’s revenue was $254 million (+4 percent) from IoTG business, $377 million (+48 percent) from Mobileye and $486 million (-6 percent) from PGS.

Patrick Gelsinger, who returned to Intel as its chief executive earlier this year, told Reuters following the release of Intel’s earnings that the company exceeded PC chip expectations in part because it was able to finish in its own factories.

Patrick Gelsinger said the chipmaker has begun to resolve its manufacturing problems, and in March announced a major expansion plan to build new factories in the United States and Europe.

Intel Chief Financial Officer George Davis told Reuters that the lower profits were because the company was investing in ramping up its new 10-nanometer and 7-nanonmeter manufacturing technologies.

Kinngai Chan, senior research analyst at Summit Insights Group, said Intel’s margins are taking a hit in part because it cannot raise prices for new products to recoup manufacturing costs as it did in the past because rivals like AMD have more competitive products.

Demand for both personal computers and cloud computing services from data centers has surged during the pandemic as many businesses shifted to working from home, trends that analysts expect to continue into this year.

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