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Intel hits revenue target amid PC, mobile decline

Posted: 20 Jul 2015 ?? ?Print Version ?Bookmark and Share

Keywords:Intel? tablet? PC? Windows 10? CPU?

Intel has announced that its Q2 revenue hit $13.2 billion and has gained a net income of $2.7 billion. Revenues were in generally in line with expectations, reflecting a continued decline in PC sales, noted the company.

"Q2 results demonstrate the transformation of our business as growth in data centre, memory and IoT accounted for more than 70 per cent of our operating profit and helped offset a challenging PC market," said Intel CEO Brian Krzanich.

PC chip sales up two per cent QoQ but down 14 per cent on a YoY basis at $7.5 billion. While PCs continue to slump, tablets remained a bright spot for the chip giant with sales of 9.9 million units, up 11 per cent YoY.

Krzanich expects its next generation 14nm Skylake CPU and Microsoft's Windows 10 will "bring excitement to client computing" in H2. "Over the long haul Windows 10 will be a boost to the PC market and will take some of the [Windows]8 negativity out," Krzanich added.

Intel's data centre group saw a five per cent increase in revenue from 1Q15 and up 10 per cent from 2014 to $3.9 billion. This increase was primarily driven by strong results in cloud and networking infrastructure, said CFO Stacey Smith, Intel.

Intel revenue

The data centre group showed 19 per cent growth in 1Q15, which Smith called "pretty robust." As a result, Intel doesn't expect greater enterprise growth through the rest of the year but looks to software-defined infrastructure and storage to keep its numbers up.

"The enterprise market is weaker than expected, it's more macroeconomic driven," Krzanich said. "The same economic forces that cause the macroeconomics to be weaker will push companies to drive their businesses toward the cloud, which is why we believe the overall year will be on balance. We're looking in the long haul, don't get caught by a quarter."

Intel's partnership with Micron on NAND flash lead to a 40 per cent growth in Intel's NAND business. The company also saw a four per cent increase in its Internet of Things segment.

Krzanich said Intel's chips will likely stay in a 14nm process for longer than usual for a new node, and the company will slightly delay the purchase of some 10nm equipment. "The lithography is continuing to get more difficult as you try to scale and the number of multi-pattern steps is increasing," he noted.

Indeed, industry-wide the 10nm node is expected to require triple patterning of three to five metal layers. Prior nodes required only double patterning.

Smith forecast $14.3 billion in revenue for 3Q15, up eight per cent from Q2. Revenue for the full year of 2015 is expected to drop by about one per cent, where previous outlooks have been flat.

Intel will likely start to see the "steep part of the curve" in its spending on for its 10nm ramp during Q4. The company also expects to close its purchase of FPGA maker Altera in the next two to three quarters.

- Jessica Lipsky
??EE Times

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