Intel’s profits rise, but chip maker faces data centre woes

15 Jan 2016

Intel’s long, hard fight against a slump in microchip sales looks like it’s no longer its investors’ primary concern, with its data centre operations the new drag on operations, it seems.

The world’s largest chip maker, Intel’s fortunes in recent years have been hit by global PC sales, which, amid the dawn of mobile, have retracted. Though that’s not to say it’s all doom and gloom, though, with Intel’s might represented across many areas, and the previous quarter’s revenue growth of 8pc was hardly shabby.

Yesterday’s quarterly results, seemed to spark some positivity with regards chip making, but data centre concerns saw the company’s share price fall by as much as 5pc.

That’s because predictions of $4.43bn in data centre revenues were missed by a fair bit, Intel raking in rather less at $4.3bn.

Intel’s business, although relatively diverse, is still predominantly reliant on PC sales, which, as Gartner reported earlier this week, are in continual decline, with only Apple bucking the trend.

However, PCs could make a comeback. Gartner has predicted that, in 2016, as more Windows 10 migration takes place, the decline of PCs will slow to 1pc, with the potential for a soft recovery later in the year.

Intel is also looking to pioneer new technologies, with IoT just one area it is pouring resources into.

“Our results for the fourth quarter marked a strong finish to the year and were consistent with expectations,” said Brian Krzanich, Intel CEO.

“Our 2015 results demonstrate that Intel is evolving and our strategy is working. This year, we’ll continue to drive growth by powering the infrastructure for an increasingly smart and connected world.”

Intel’s overall revenue growth halved on the previous quarter to just 4pc, with the results following Intel’s decision to cut its own forecast back in October on the back of weak macroeconomic growth for its customers.

Q4 profits were €3.3bn and the full year results were:

  • Client computing – $32.2bn, down 8pc on 2014
  • Data centre – $16bn, up 11pc from 2014
  • IoT – $2.3bn, up 7pc on 2014
  • Software and services operating segments – $2.2bn, down 2pc on 2014
  • Non-volatile memory solution group – up 21pc on 2014

Intel HQ image via Dragan Jovanovic/Shutterstock

Gordon Hunt was a journalist with Silicon Republic