Intel reports flat Q1 as data centre chips are down but PC chips are up

26 Apr 2019161 Views

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Chip giant maintains a cautious outlook for year ahead.

Intel, which recently announced it is exiting the 5G smartphone modem space, has reported Q1 revenues of $16.1bn, flat year on year.

Net income for the quarter fell 11pc year on year to $4bn, while PC-centric revenues rose 4pc in Q1.

‘We aim to capitalise on key technology inflections that set us up to play a larger role in our customers’ success’
– BOB SWAN

The company said that its first high-volume processor, codenamed Ice Lake, remains on track to be the main chip in volume systems in time for the vital 2019 Christmas sales season.

However, Intel’s data-centric businesses declined 5pc year on year due to a number of factors including weak data centre sales in China, and declines in communications service provider sales and from government revenue.

Despite Intel’s internet of things (IoT) group revenue increasing 8pc year on year and Mobileye achieving record Q1 sales of $209m, the company’s memory business was down 12pc year over year while programmable solutions revenues were down 2pc for the same period.

Staying chipper

“Results for the first quarter were slightly higher than our January expectations,” said Intel CEO Bob Swan.

“We shipped a strong mix of high-performance products and continued spending discipline while ramping 10nm and managing a challenging NAND pricing environment. Looking ahead, we’re taking a more cautious view of the year, although we expect market conditions to improve in the second half.

“Our team is focused on expanding our market opportunity, accelerating our innovation and improving execution while evolving our culture. We aim to capitalise on key technology inflections that set us up to play a larger role in our customers’ success, while improving returns for our owners.”

In recent weeks Intel signalled its departure from the 5G smartphone chip space after Apple revealed it had reached a settlement with Qualcomm. Intel is the sole supplier of iPhone modem chips but has struggled to make the transition to 5G. The company said that it will maintain its focus on 5G modems for PCs and other computing devices.

In an interview with The Wall Street Journal, Swan clarified that there just wasn’t enough money left in the mobile 5G marketplace after Apple and Qualcomm settled their dispute, enabling Qualcomm to provide modems to Apple.

“In light of the announcement of Apple and Qualcomm, we assessed the prospects for us to make money while delivering this technology for smartphones and concluded at the time that we just didn’t see a path,” Swan said.

With the buoyant nature of the global chip business, Intel remains the world’s largest supplier of 14nm and 10nm chips, and the company – which is celebrating its 30th year in Ireland this year – appears to be pressing ahead with a massive $3.5bn expansion of its chip plant in Leixlip, Co Kildare.

In December, Intel’s senior vice-president and general manager of manufacturing and operations, Irishwoman Ann Kelleher, announced that Intel planned to expand its major wafer fab sites in Ireland, Israel and Oregon to pursue a $300bn annual available chip market.

Earlier this month Siliconrepublic.com reported that the company was given the go-ahead to proceed with its planning permission to build the new plant that will employ more than 800 people full-time but as many as 3,000 during the construction phase.

John Kennedy is an award-winning technology journalist who served as editor of Siliconrepublic.com for 17 years.

editorial@siliconrepublic.com