Intel CEO Robert Swan at last quarterly more often referred to the lack of capacity in the context of increasing costs and shifting the structure of the assortment of processors towards more expensive models with more cores. Such metamorphoses allowed Intel to increase the average selling price of the processor in the first quarter by 13% in the mobile segment and by 7% in the desktop segment, compared with the same period last year. At the same time, processor sales decreased by 7% and 8%, respectively. Consolidated revenue of the division which is engaged in release of client products grew by 4%.
However, desktop component revenue was still down 1% in the first quarter, while mobile saw revenue growth of 5%. From the implementation of modems, Intel managed to gain 26% more funds in the first quarter than a year earlier. However, in absolute terms, modem revenue did not exceed $800 million, so its growth can hardly be considered a decisive factor against the background of the division's total revenue of $8,6 billion.
Lack of capacity limited the growth of processor sales
It cannot be argued, however, that Intel is pleased with the impact of the deficit situation on revenue figures. Yes, it began to sell more expensive processors, but CFO George Davis admitted in his comments that processor sales were held back by the limited production capacity of the company.
In the second quarter, the CFO predicts that the PC segment will generate 8-9% less revenue due to an increase in the share of processors with fewer cores and smaller chips. The average selling price of processors will decrease, and this will negatively affect revenue.
In the first quarter, Intel's revenue was supported by strong demand for gaming systems and commercial computers. Until the end of the year, the need to spend money on the development of the 10nm process technology will have a negative impact on Intel's operating profit margin, which will not exceed 32%. Partially, this impact will be offset by a $1 billion reduction in the company's costs, including due to the abandonment of the development of 5G modems for smartphones.
The shortage of processors will be felt in the third quarter
Robert Swan explained that the company has taken measures to increase the output of 14nm processors in the second half of the year, but this will still not be enough to completely overcome the deficit. The company's customers will have to come to terms with the fact that in the third quarter, priority in deliveries will be given to more expensive processor models. By the way, such a policy has already led to a noticeable strengthening of AMD's position in the segment of laptops running the Google Chrome OS operating system, according to independent analysts.
Swan at the same time explained what needs the funds released as part of cost optimization will be used for. In addition to the development of 10nm and 7nm process technologies, priority will be given to accelerating the release of new products in the client and server segments, as well as the development of artificial intelligence systems, autonomous vehicles and 5G network infrastructure. The Mobileye division, for example, increased revenue by 38% in the first quarter, bringing it to record levels. In the automotive sector, Intel has not only new products, but also new customers.
Source: 3dnews.ru