Weak Intel outlook stokes fears of a chip slowdown
(REUTERS/Fabian Bimmer)
Shares of Intel fell in extended trading after forecasting current-quarter revenue and profit below analysts' estimates and the chipmaker also missed fourth-quarter sales estimates on Thursday.
Intel pointed to a slowdown in China and sluggish demand for its data center and modem chips.
The news further stoked fears of an industry slowdown after sales warnings from Apple, Samsung Electronics and Taiwan Semiconductor earlier this month pointed to stagnating smartphone demand and a cooling Chinese economy.
Those fears had lifted briefly earlier this week with better-than-expected quarterly results from Texas Instruments, Xilinx and Lam Research.
But after Intel's report on Thursday, shares of smaller rival Advanced Micro Devices, which reports results next Tuesday and Nvidia fell
.Intel said weaker demand from China hurt the company's data center chip business, which has driven growth in recent years as PC sales have slowed and cloud-based services have become more popular, according to Reuters.
Fears caused by the trade tensions between the U.S. and China had buyers stocking up on chips earlier than usual last year, caused a slowdown in sales.
In the past, Intel had been insulated from swings in Apple's iPhone supply chain because it was not a major supplier. But it was the sole provider in 2018 of iPhone modems, which connect phones to wireless data networks, and earlier this month, Apple cut its revenue forecast, citing weak demand in China.
Fourth-quarter revenue in the higher-margin data center business came in at $6.07 billion, below expectations of $6.35 billion, according to financial and data analytics firm FactSet.
Revenue in the client computing business, which includes sales to PC makers was $9.82 billion, missing FactSet estimates of $10.01 billion.
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Intel reported net income of $5.20 billion, or $1.12 per share, for the fourth quarter ended Dec. 29, compared with a loss of $687 million, or 15 cents per share, a year earlier.
Net revenue rose to $18.66 billion from $17.05 billion, but missed estimates of $19.01 billion.
Excluding items, the company earned $1.28 per share, above expectations of $1.22.