Chip designer and manufacturer Intel publishes Q3 2021 financials. Comparing with the previous year:
- revenue increased by 5%, up to $19.2 billion;
- gross margin increased from 53.1 to 56%;
- operating profit increased by 3%, up to 5.2 billion;
- net profit increased by 60%, up to 6.8 billion.
The company reports weak sales of PC processors and lower gross margins in the next 2-3 years. After the report, Intel shares fell by 9%, with 56 to 51 $.
Processors without displays are not needed
In the third quarter, sales of PC processors - Intel's core business - fell by 2%, up to $9.7 billion. According to the company, sales fell due to disruptions in laptop manufacturing: manufacturers do not have enough parts to assemble. "We have processors, but others may lack displays or wifi modules", - said the head of Intel.
Last year, during quarantine, the demand for computers and other equipment increased. Now, according to analysts, sales growth may slow down. Intel thinks differently: demand will exceed supply until 2023.
Sales of processors and other chips for the data center - Intel's second largest segment - grew by 10%, up to 6.5 billion dollars. The company noted the increased demand of corporations and governments for local servers.
Profitability will fall
Intel not only develops, but also produces processors. Therefore, its profitability is higher, than competitors. For example, gross margin AMD, which orders chips from TSMC, on 10 percentage points below - 46%.
In the coming years, Intel plans to significantly increase capital expenditures, including the construction of a new chip manufacturing plant. In 2021 - up to 18-19 billion, in 2022 - up to $ 25-28 billion.
With new production lines, the company expects to increase its gross margin, which has fallen in the last four years from 62 to 56%. According to Intel, in the next 2-3 years, the margin will fall even more - to 52%.
With the commissioning of new factories, the company plans to produce chips for other developers. Then, according to Intel's long-term expectations, marginality will start to increase, and revenue will grow by an average of 10-12% over several years.
