After a year of gloomy financial results and a dispiriting outlook, Intel said Thursday that the clouds are parting.
Intel shares climbed sharply as the company handily topped its third-quarter revenue forecast, buoyed by a rebound in its data center business.
The chipmaker declared it has finally overcome a multiyear delay in the release of its next-generation, 10-nanometer microprocessor and said those new chips are now in volume production at its factories in Oregon and Israel.
CEO Bob Swan said Intel is now ready to resume its standard, two-year upgrade cycle after a delay that allowed rivals to match or exceed Intel technology.
“We’re working to recapture process leadership,” Swan told investment analysts on an earnings call Thursday afternoon.
It’s an extraordinary admission from Intel, a company that has long prided itself on being the world’s largest and most advanced chipmaker, and suggests just how damaging the company’s 10nm troubles were.
Intel was essentially in over its head with the 10nm chips, Swan said, setting goals for transistor density it simply couldn’t achieve.
“We just can’t hit those kind of really aggressive targets,” Swan admitted. He said Intel has more modest expectations for the new technology in its forthcoming 7nm chips, due late in 2021.
Third-quarter sales totaled $19.2 billion, the chipmaker said, well above the $18 billion the company had forecast. The boost means Intel stands a chance of matching its record 2018 results instead of suffering a decline in full-year sales as it had been expecting.
Sales in Intel’s PC group were down 5% from the third quarter of 2018, but the company’s highly profitable data center business grew 4%.
Third-quarter profits totaled $5.99 billion, or $1.36 cents a share. That compares to $6.40 billion, $1.40 a share, in the same quarter a year ago.
Intel continues to suffer shortages in chips for PCs and laptops, an embarrassing lapse that hurt the company’s results all year — and has also dampened the performance of its clients.
“We’re letting our customers down and they’re expecting more from us,” Swan said. He insisted Intel is on track to resolve the shortages next year.
Thursday’s results delighted investors, with shares climbing 3.5% in after-hours trading to $54.06.
The stock has traded between $42.86 and $59.59 in the past year.
Intel’s headquarters are in Silicon Valley, but the company’s largest and most advanced operations are in Washington County. It is Oregon’s largest corporate employer, with 20,000 people working at its campuses in Washington County.
Intel is in the process of expanding, adding a multibillion-dollar, third phase to its D1X research factory in Hillsboro.