Intel’s Sales Forecast Falls Short as Data Center Revenue Sags

Intel Corp., the world’s biggest semiconductor maker, gave a lackluster third-quarter sales forecast, indicating its data-center business continues to suffer market share losses in the face of stiffer competition.

Sales in the current period will be about $18.2 billion, Intel said in a statement Thursday. That compares with average analyst projections of $18.3 billion. Adjusted gross margin, a measure of profitability, will be about 55%, the company said, and per-share profit is forecast to be $1.10.

While the performance of Intel’s lucrative server chip business improved in the second quarter, revenue still declined by 9% from a year earlier. The company’s PC chip business slightly topped estimates, helping counter concern that demand for notebooks would drop as pandemic-related lockdowns bring an end to working and studying from home. For the year, Intel said adjusted sales will be about $73.5 billion, ahead of predictions for $73.1 billion.

Chief Executive Officer Pat Gelsinger, who took the helm in February, has pledged to regain Intel’s technological leadership of the semiconductor industry, and plans to spend heavily to expand its reach in manufacturing to pose a stronger challenge to Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. Before that effort can bear fruit, he’s contending with market-share losses in an increasingly competitive market for the chips that run PCs and servers.

The shares slipped about 2% in extended trading following the announcement. They’d earlier closed at $55.96 in New York, leaving them up 12% this year.

Santa Clara, California-based Intel said second-quarter profit, excluding certain items, was $5.2 billion, or $1.28 a share. Sales climbed 2% to $18.5 billion. On average, analysts had predicted earnings of $1.07 per share on revenue of $17.8 billion.

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