Intel Set To Hit Gross Margin Due To Increasing AMD Market Share

Chipmaker Intel Corporation is expected to post weak results today due to continued chip shortages and stiff competition from smaller rival, Advanced Micro Devices, Inc (AMD). Intel, which is also expected to share more details about its push in contract chip manufacturing soon, released a profit forecast of $ 17.8 billion for its second quarter, or the quarter that ended in June. In a report that quotes analysts polled by FactSet, the Wall Street Journal estimates the company will meet those forecasts and post a net profit of $ 4.2 billion to mark a decline of about $ 1 billion year-on-year. the other.

Intel to report second quarter 2021 revenue in line with first quarter profit guidance

In addition to reporting a potential drop in profits, The Journal also estimates that Intel experienced a decline in sales of its data centers in the second quarter. The reasons for this deficit include a drop in booed demand for the products seen in the aftermath of the ongoing pandemic and stronger competition from Intel’s main rival, AMD.

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AMD is also the subject of an analyst note published by Citigroup analyst Christopher Danely. Danely believes that tough competition from AMD will mean a poor outlook for Intel. A summary of his rating shared by ThyFly reads as follows:

Citi analyst Christopher Danely expects Intel (INTC) to report “weak” prospects for the second and third quarters due to pushes in the PC food chain and pressure on margins. the loss of shares in its CPU activity. “Negative catalysts” such as expulsions from the end-market PCs and lower margins due to loss of AMD (AMD) share will lower consensus estimates and offset Intel’s “attractive valuation”, says Danely to investors in a research note. The analyst believes that Intel’s gross margins could plunge in the 1940s due to the loss of AMD shares and a correction in PC demand. It maintains a neutral rating on the action with a price target of $ 60.

Intel’s forecast for its second quarter 2021 was provided at the end of the first quarter financial results.

The $ 17.8 billion in sales or net income that analysts polled by FactSet expect Intel to release are in line with the company’s forecast for the previous quarter. In its first quarter earnings report, the Santa Clara chip giant said it expected to earn $ 17.8 billion in non-GAAP revenue. Analysts’ estimates are also generally non-GAAP. The Journal added that analysts also believe that Intel will report profit or net profit of $ 4.2 billion, which marks a sharp drop from the figure of $ 5.1 billion in the quarter of the year. last. Analysts polled by Yahoo Finance also have an average revenue estimate of $ 17.8 billion with a low estimate of $ 17.4 billion.

The main competitive disadvantage that Intel currently faces is its inability to produce processors made by advanced manufacturing technologies. Its only rival in the x86 microprocessor market, AMD, is seen to have an advantage on this front as it sources its products from the Taiwan Semiconductor Manufacturing Company (TSMC). TSMC’s latest process for personal computing products is its 7nm node, which is also considered by many to be technologically inferior to Intel’s 7nm node.

However, Intel has yet to begin mass production of its 7nm processors, which will be largely manufactured using Extreme Ultraviolet Lithography (EUV). While all semiconductors made below 10nm use UVV, chipmakers differ in the extent to which they use low wavelength light. Higher utilization reduces manufacturing complexity but takes more time to master, and lower utilization results in technological drawbacks.

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