Intel Corp on Thursday raised its annual sales outlook but fell short of analyst expectations for first-quarter data center chip sales and its second-quarter profit forecast, signaling a turbulent road ahead as the company aims to catch up to rivals with faster chips.
Intel fumbled new manufacturing technology in recent years, causing it to fall behind rivals such as Advanced Micro Devices Inc and Nvidia Corp in the race to make faster, smaller chips. Patrick Gelsinger, who returned to Intel as its chief executive this year, said the chipmaker has begun to resolve its manufacturing problems, and in March announced a major expansion plan to build new factories in the United States and Europe.
Intel said it expects 2021 adjusted revenue and profits of $72.5 billion and $4.60 per share, above analyst estimates of $72.32 billion and $4.58 per share, according to Refinitiv data. The chipmaker forecast second-quarter adjusted revenue and profits of $17.8 billion and $1.05 per share, with sales above analyst estimates of $17.59 billion but profits below estimates $1.09 per share, according to Refinitiv data.
Intel shares were down 2.2% to $61.17 in after-hours trading after the results.
Demand for both personal computers and cloud computing services from data centers has surged during the pandemic as many businesses shifted to working from home, trends that analyst expect to continue into this year. Intel said its PC chip business had sales of $10.6 billion in the first quarter, ahead of analyst expectations of $10.17 billion, according to data from FactSet. Intel’s data center chip business had $5.6 billion in first-quarter sales, below FactSet estimates of $5.89 billion.
Intel, which is one of the few remaining companies in the processor chip industry that both designs and manufactures its own chips, has said it has been able to beat out rivals during a global chip shortage by operating its own factories. But the company said shortfalls of other third-party components needed to build complete computers could hold back its sales this year.
The global chip shortage has disrupted assembly lines at automakers such as Ford Motor Co and General Motors Co. Gelsinger said earlier this month that Intel was in talks with the automotive chip companies to help manufacture their chips in Intel’s factories.
Intel said adjusted sales and earnings for the first quarter ended March 27 were $18.6 billion and $1.39 per share, higher than analyst estimates of $17.89 billion and $1.15 per share, according to Refinitiv data.