Chipmaker Intel reported its annual sales forecast on Thursday. Along with the reportage, Intel mentioned to be facing supply chain constraints that might lead to weaker result by the end of the year.
Intel revealed its 2021 forecast for adjusted sales of $73.5 billion. The figure goes higher than Wall Street expectations. The higher number is driven by a strong second quarter ended June 26. A modestly better-than-expected result in the third quarter contributed to the higher expectation as well. Though, this might imply a weak fourth quarter.
The announcement further affected the shares for Intel in after-hours trading to fall by 2.8%.
In the chipmaker industry, Intel is one of the few remaining companies that both designs and manufactures its own chip. The company also showed a better management to weather supply chin compared to some of its rivals. Intel even mentioned its intention to build a chip-making business for others, called a “foundry” business.
The Chief Executive Officer of Intel, Pat Gelsinger, however, remained silent on a recent reportage on the company’s plan to purchase Global Foundries for $30 billion in relation to the foundry efforts. Gelsinger, though, told Reuters to be expecting industry consolidation to continue. Thus, “M&A will remain a part of our strategy” for building Intel’s foundry business, Gelsinger continued.
Intel bets higher for its annual forecast
The annual forecast for Intel increased to $1 billion, much higher than the expectations at $72.80, Refinitiv IBES data showed. Accordingly, the company previously bet to reach $72.5 billion.
Additionally, Intel expects to achieve $18.2 billion in adjusted third-quarter revenue. The figure goes only modestly above estimates of $18.09 billion, Refinitiv data showed.
According to Reuters, Gelsinger said that the company would sell more chips if it’s possible. However, supply constraints from its own suppliers of materials and equipments are still haunting the chipmaker company.
Quoted from Reuters, Gelsinger said, “We are helping them build factories as fast as they can.” Gelsinger then added, “But it will be one of those things that just takes a couple years to fully catch up to this explosive demand we’re seeing, and we have better tools to address it than others.”
For the second quarter’s record, Intel’s higher-margin data center business’ revenue dropped 9% to $6.5 billion. On the other hand, its personal computing business revenue grew by 6%. Both figure exceeds Refinitiv estimates.
The company gained $1.28 per share in the second quarter on an adjusted basis. In comparison, Refinitiv data noted the estimates to range around $1.06.
Analysts voiced their doubts on Intel
On a different conference call, Gelsinger told investors to be expecting a constant growth in the PC markets into 2022.
Some analysts, however, think the opposite. An analyst at Summit Insights Group, Kinngai Chan, for example, said that Intel was most probably “playing defense” against rivals like AMD with better chips.
“We think the entire semiconductor supply chain will be caught up by 4Q21 as we believe there’s rampant double ordering in the supply chain coupled with a moderating end-market demand,” Chan said.
Intel itself reported to generate $18.5 billion in adjusted sales for the just-ended second quarter. The record goes well above analyst estimates of $17.80 billion, Refinitiv data notes.
By taking into account Intel’s reportage from the second and third quarter, another analyst from CFRA Research, Angela Zino, voiced another view on Intel’s future. Zino, on the contrary, foresee that Intel’s raised full-year forecast implied a shortfall in fourth-quarter sales.
As a note, Intel usually records bigger sales in the fourth quarter as consumers purchase laptops and PCs for holiday gifts.
In relation to this, Intel did disclose that it could possibly hit a one-time charge of $300 million in the fourth quarter. According to Intel, its business of selling supercomputers to the federal government could be the trigger.
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