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Intel posts flat revenues for Q1 as PC demand stays low

Posted: 17 Apr 2015     Print Version  Bookmark and Share

Keywords:Intel  desktop  tablet  notebook  Microsoft Windows 10 

Intel has revealed a flat Q1 revenue YoY, with $2.6 billion operating income, up 4 per cent over last year. Considered as the largest semiconductor company, Intel hit a Q1 revenue of $12.8 billion with operating income of $2.6 billion (net income $2 billion).

"YoY revenues were flat, with double-digit revenue growth in the data centre, IoT and memory businesses offsetting lower than expected demand for business desktop PCs," said Intel CEO Brian Krzanich.

Revenue dropped 8 per cent YoY in the PC client group (personal desktops, notebooks, tablets and phones), but tablets were a bright spot. Bolstering the lower PC numbers, the IoT group grew by 11 per cent YoY ($533 million) "based on strength in the retail and digital security market segments" said Stacy Smith, CFO, Intel. The data centre group, at $3.7 billion in revenue, also grew 19 per cent YoY. Both groups, however, were down 10 per cent over last quarter. The company's software and services operating segments were down 4 per cent sequentially and 3 per cent YoY, making revenue of $534 million in Q1.

Is MediaTek all set to become Intel's PC rival?
The speculations emerged with the release of MediaTek's MT8173 processor, which combines two ARM Cortex A53 cores with a pair of Cortex A72 cores. The MediaTek chip scores about 1,500 on single-core Geekbench results, reportedly the highest score ever for a mobile processor, including those from Intel.

The summer release of Microsoft Windows 10 plays into Intel's projections. "Our customers will lean-out inventory levels in Q2 and then they'll rebuild inventory levels in Q3," around the Windows 10 launch, said Smith.

Also anticipated are the launches of Skylake and the 3D NAND technology, developed with Micron, which will be available in 2H15. Intel confirmed that the Micron partnership was going well. Intel added that 10nm ramps this year, and the company will shift fab use off of 22nm to 14nm.

Intel is also reducing its capital expenditures in Q2, which the company played off as nimbleness. "You're seeing better utilisation, better efficiency, but also the ability to move more 22nm capacity over the 14nm," said Krzanich. "14nm and the ramps of our Broadwell products, are slightly ahead of our forecast," said Krzanich. "And we're seeing some things like better yields, better utilisation out of our 14nm as it continues to get healthier. And so all of those combined have led us adjust our capital."

"The bottom line is I don't expect this always to have this lower level CapEx," Krzanich offered. "The capital intensity will go up in some nanometres where we've got them" but Krzanich stressed that density improvements might keep the costs of ramping up to next node down.

"The real fundamental of Moore's law is [that] one is economic and on the 50th anniversary of Moore's law which this year is we should remember that Moore's Law is an economic law and that we're going to reduce the cost as well as we're improving the performance of these parts," said Krzanich.

Intel revenue

Krzanich repeatedly refused to comment on any recent or upcoming merger talks. When analysts on the call pressed on merger and acquisitions, Krzanich and Smith stressed they continued to invest in the company. "It's really the same strategy that's been before me and that is always first investment of business."

- Susan Rambo
  EE Times

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