Intel Corporation reported third-quarter 2021 financial results. Intel revenue rose 5 percent to $19.2 billion in Q3 2021, the chipmaker said.
Intel achieved all-time record revenue in Intel’s Internet of Things Group (IOTG) and record third-quarter revenue in the Data Center Group (DCG) and Mobileye businesses.
“Our focus on execution continued as we started delivering on our IDM 2.0 commitments. We broke ground on new fabs, shared our accelerated path to regain process performance leadership, and unveiled our architectural innovations in a decade. We also announced major customer wins across every part of our business,” said Pat Gelsinger, Intel CEO.
Third-quarter revenue was led by 10 percent growth in the DCG to $6.5 billion and 54 percent increase in IOTG to $1 billion.
The Client Computing Group (CCG) revenue fell 2 percent to $9.7 billion due to lower notebook volumes due to industry-wide component shortages, and on lower adjacent revenue, partially offset by higher average selling prices (ASPs) and strength in desktop.
Forecast lower profit margins
Intel forecast lower profit margins for years to come as it attempts to regain a lead in making the world’s fastest chips and adding new factories.
Intel Chief Executive Officer Pat Gelsinger told Reuters that shortages of other chips needed to make computers are holding back sales of the company’s flagship processor chips.
Santa Clara, California-based Intel, the world’s biggest maker of central processors at the heart of PCs and data center servers, said gross profit margins are likely to be between 51 percent and 53 percent in the next two to three years.
The reason was Intel’s plan to introduce several new generations of chipmaking technology by 2025. All new generations of chipmaking technology tend to be less efficient in their early phases, becoming more profitable as chipmakers perfect their processes.
Gelsinger said Intel has resolved shortages facing its own internal manufacturing operations, but that shortages of other chips such as power management chips and WiFi chips were stopping its customers from shipping PCs and servers, reducing the need for Intel’s chips.
Intel said it expects at least $74 billion in revenue in 2022. Intel expects fourth-quarter revenue of about $18.3 billion.
The company plans to spend heavily, saying that capital expenditures could reach $25 billion to $28 billion in 2022 and rise in subsequent years.
Rivals like Nvidia and AMD, who make faster chips by leveraging outside contract manufacturers are continuing to eat into Intel’s market share.
Intel revenue from data center segment touched $6.5 billion. Gelsinger told Reuters some of the data center results were because of Chinese cloud computing vendors – major customers of Intel – adjusting to new rules from the Chinese government.
Atlantic Equities analyst Ianjit Bhatti said the lower sales to cloud computing groups reflected market share gains by AMD.
