Intel's Chip Shortage, Competition in Focus: What to Watch
January 23 2020 - 5:59AM
Dow Jones News
By Asa Fitch
Intel Corp. is expected to report fiscal fourth-quarter earnings
Thursday after the market closes. The results come as the chip
maker tries to resolve supply shortages and protect its dominant
market position from growing competition by rival Advanced Micro
Devices Inc. Here's what to expect:
EARNINGS FORECAST: Analysts surveyed by FactSet expect Intel to
report $1.25 in adjusted earnings per share, down from $1.28 in the
same period last year. Intel previously warned it faced some higher
costs, as it tries to ramp up production of a new generation of
superfast processors.
REVENUE FORECAST: Intel is expected to report $19.23 billion in
revenue, up about 3% compared with the year-prior period. Intel has
benefited from the growing trend toward cloud computing, where
companies rent data storage and processing capacity. The data
centers enabling the cloud are big users of advanced chips.
WHAT TO WATCH:
SUPPLY WORRIES: Intel, for months, has struggled to keep up with
surprisingly strong demand for chips used in many personal
computers. Now investors are looking for signs the company is
getting past those inventory challenges. Intel has already said
they would weigh on the last quarter's results and issued an
unusual public apology. But PC shipments, which rose in the fourth
quarter, according to figures from Gartner and International Data
Corp., could help compensate for some of those problems. The chips
Intel is selling to PC makers come with high margins, Cascend said
in a research note.
DATA-CENTER DEMAND: Intel is battling with rival AMD in the hot
market for chips that go into data centers. AMD released new server
processors last year that bested Intel's in some performance and
cost measures. Intel, however, reported 4% year-over-year
data-center revenue growth the previous quarter, as cloud-computing
giants added hardware. "By all accounts cloud spending should still
be strong" in the fourth quarter, Bernstein Research analysts said
in a note.
SMALLER TRANSISTORS: Intel has fallen behind chip-making giant
Taiwan Semiconductor Manufacturing Co. in the race to make the
smallest transistors that power the fastest computers. Intel only
recently started to sell cutting-edge 10-nanometer chips, but its
production delays helped AMD, which contracts with TSMC to make its
chips, to gain market share. In laptops, for example, Intel
supplied 95.7% of processors in early 2018, but just 82.5% by late
last year, according to Susquehanna Financial Group research.
Investors will be scrutinizing Intel's expected 2020 outlook for
signs it is getting more 10-nanometer devices into the market.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
January 23, 2020 05:44 ET (10:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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