Intel announced its third quarter financial results on October 21 (local time). Intel stock fell 9% after the financial statements were announced as 3Q sales fell short of market expectations.
Intel revenue for the third quarter was $18.1 billion, falling short of the consensus estimate of $18.24 billion. Client Computing, Intel’s largest business, posted revenue of $9.7 billion, down 2% year-over-year. The Client Computing segment includes sales of chips for Intel PCs. Regarding the decrease in sales compared to the previous year, Intel CEO Pat Gelsinger pointed out that although the shortage of semiconductors has been resolved, shipments may have slowed due to the lack of parts on the part of PC manufacturers. Gelsinger said the company is at its worst right now and will be phased out by the next quarter, saying it will not be able to strike a balance between supply and demand until 2023.
Also, among analysts on PC demand caused by the COVID-19 pandemic, there is a possibility that the surge in demand is ending because PC sales are stagnating. CEO Gelsinger believes that the increase in PC demand tends to continue, and the PC business is now structurally large and is becoming a business that records 1 million units per day.
Meanwhile, the data center segment, which sells processors and other silicon for data centers, recorded $6.5 billion in revenue, up 10% year over year. However, this figure also fell short of the market estimate of $6.6 billion. The reason for the increase in Intel data center sales is analyzed to be due to the increase in demand for on-premises servers for businesses and governments. Meanwhile, CEO Gelsinger explained that sales increased more than expected as a major customer, a Chinese cloud computing service provider, responded to new government regulations.
In addition, IoT sales increased by 54% year-on-year to USD 1 billion, while sales of Mobileye, an automobile-related company, an Intel subsidiary, increased by 39% compared to the same period of the previous year, to USD 306 million, and non-volatile memory solutions division increased year-on-year. Revenue in the Programmable Solutions segment decreased 4% to $1.1 billion, and revenue from the Programmable Solutions segment increased 16% year-over-year to $478 million.
Simultaneously with the release of third-quarter 2021 earnings, Intel announced that it would invest $20 billion in this area, including a project to build a new semiconductor plant in Arizona, USA. In addition, Intel expects to record revenue of $18.3 billion in the fourth quarter. Related information can be found here.