New Intel CEO: “The World Needs More Semiconductors”

Intel delivered mixed results Thursday on its big makeover, with second-quarter sales beating expectations even as Wall Street wrings its hands on the chipmaker’s declining data center activity and plans to spend money. huge sums for new factories in US and Europe.

“The world needs more semiconductors,” insisted new CEO Pat Gelsinger on a call with investment analysts. “The world needs a more balanced global supply chain for these semiconductors. “

Investors are still unsure whether Intel, Oregon’s largest corporate employer, is the company that will supply these chips. The company’s stock has been flat over the past six months and has fallen 2% in after-hours trading after Intel released its quarterly figures, to $ 54.90.

After years of technological setbacks, Intel hired Gelsinger in February and tasked him with restoring Intel’s engineering leadership and reviving its beleaguered factory network. He wants to expand into contract manufacturing for other companies, an activity that the semiconductor industry calls foundry work.

Last month, Gelsinger also announced a major restructuring, replacing Intel’s head of data center operations and bringing in a colleague from his latest company, VMware, to become chief technology officer. And Gelsinger, who spent 30 years at Intel before leaving in 2009, has rehired a number of executives and engineers who left during the dozen years he was away.

“The flow of talent was coming out of the company,” Gelsinger said Thursday. “It now comes down to the company. “

It could be up to two years for the chip industry to shake off the global chip shortage that is choking manufacturers in the die industries, Gelsinger said, and even then he said he expected that the demand for chips continues to grow indefinitely.

Intel therefore plans to spend $ 40 billion over the next few years on new factories, announcing new sites in the United States and Europe by the end of the year. Intel’s spending will be increased by financial support pending in Congress and to be debated in Europe. .

And last week, the Wall Street Journal reported this month that Intel is negotiating to buy one of the largest contract manufacturers, Global Foundries, in a potential $ 30 billion deal.

Although Gelsinger would not directly address this report, he acknowledged the possibility that Intel could buy another manufacturer. He called consolidation between foundries “inevitable”.

Thursday’s financial results were slightly better than expected:

  • Sales totaled $ 19.6 billion in the quarter ended in June, up from $ 19.7 billion during the same period in 2020.
  • Sales for Intel’s customer group, which includes PCs, were up 6% from a year ago. Data center sales were down 9%, following weak data center sales in the first quarter. Intel has said it is keeping prices low in response to competitive pressure, but the company said it expects data center sales to grow by double digits in the second half of the year. .
  • Profits totaled $ 5.1 billion, stable from the same quarter last year at $ 1.24 per share.
  • The company forecasts third-quarter sales of $ 19.1 billion, which would represent an increase of 4.2% from the same quarter in 2020. Intel forecasts annual sales of $ 77.6 billion, compared to $ 77 billion. of dollars in its last forecast.
  • And Gelsinger said development of Intel’s upcoming 7-nanometer processors, the third consecutive generation of Intel chips hit with unexpected delays, “is now going very well.” Intel expects these chips to be available in 2023.

– Mike Rogoway | [email protected] | Twitter: @rogoway | 503-294-7699

Previous MEG Energy announces repayment of its US $ 100 million debt
Next Desert Financial Credit Union Appoints New Retail Director to Lead 'Phygital' Revolution