(Reuters) – Chipmaker Intel ( INTC.O ) said on Thursday that a decline in gross profit in the second half of the year would improve, a welcome sign in a struggling economy that sent shares up 4 percent in after-hours trading.
Intel also said it was delivering a long-delayed segment in terms of volume, and CEO Pat Gelsinger told Reuters he saw signs of stabilization in the PC market on which Intel built its reputation.
Gelsinger said he sees “some green shoots, increasing stability in the PC market as inventories stabilize” and expects the company to maintain its position in the data center business.
In a conference call with investors, the company expected adjusted gross profit to exceed 40% in the second half after hitting an all-time low in the first half of the year. This was enough to allay concerns about current profitability.
A 30% drop in global PC shipments in the first quarter has some chipmakers hoping that stockpiles have disappeared, making room for new orders.
“The numbers show that Intel is about as bad as it’s going to be, so the next few quarters are very much dependent on acquisitions by tech companies,” said Glenn O’Donnell, director of research at Forrester. “We believe spending on technology will gradually increase.”
Intel also began shipping its most powerful data center chip, codenamed Sapphire Rapids, which has been delayed for more than a year. That delay has allowed rivals such as Advanced Micro Devices ( AMD.O ) and ARM-based server CPU makers such as Ampere Computing to take market share from the company.
Refinitiv data showed the company expected second-quarter revenue in the mid-range of $12 billion, beating analysts’ estimates of $11.75 billion.
According to Refinitiv, Intel struggled for cash in the adjusted second quarter of 4 cents per share, worse than analysts’ expected earnings of 1 cent per share.
Underscoring Intel’s declining profitability in recent years, unadjusted gross margin fell to 34.2% in the first quarter, nearly half of its multi-decade peak of 67% in 2010. in the second quarter. “While we understand that investors may be disappointed with the second quarter 2013 gross profit forecast, we remain confident that Intel’s gross profit will recover in the second half of 2013,” said Summit Insights factory analyst Kenze Chan. and the start-up cost of the new product. Group.
China meeting
Gelsinger said he discussed Intel’s $5.4 billion effort to buy Tower Semiconductor ( TSEM.TA ) with Chinese government officials during a recent trip to Beijing. Intel is still awaiting regulatory approval in China to close the deal.
Gelsinger said, “It was a topic of discussion at a lot of meetings there.” “We don’t have a clear vision of when that will happen, but we are working hard to get approval for the acquisition.”
He said the Chinese market, one of Intel’s biggest, feels it is gaining momentum and customers are getting “strong support and enthusiasm”. While geopolitical risks remain, he added, “business is a bridge between the U.S. and China, which we think is positive.”
Since China lifted its COVID pandemic measures, CEOs of major tech companies have visited the country.
First-quarter revenue of $11.72 billion was slightly below estimates of $11.04 billion. Intel reported an adjusted loss of 4 cents per share, beating analysts’ expectations for an adjusted loss of 15 percent per share.
