Intel quashes Microchip's forecast of a wide-ranging industry slump with its $14.7 billion Q3 revenue. In addition, the company predicts its revenue will reach nearly $100 million in the next quarter.

Microchip, often seen as an industry bellwether, triggered alarm late last week when it said its net quarterly sales would be about three per cent below its expectations. Microchip's CEO predicted an industry downturn, sending many tech stock prices down, including Intel's. .

Microchip blamed the downturn on a slowdown in China and a build-up in inventory in the distribution channel. In a call with financial analysts, Intel's CFO Stacy Smith reacted to the Microchip report.

"We're watching the markets all the time. Did we do a triple check after Microchip? We did and we're not seeing anything unusual out there," he said.

Intel's Q3 revenue was up 5 per cent from Q2 and 8 per cent from the same quarter last year. Net income rose 19 per cent from Q2 and 12 per cent from the same period last year to $3.3 billion this year.

"We are pleased by the progress the company is making," said Intel CEO Brian Krzanich. "We achieved our best-ever revenue and strong profits in Q3. There is more to do, but our results give us confidence that we're successfully executing to our strategy of extending our products across a broad range of exciting new markets."

Intel listed several key trends for the quarter: PC group revenue was $9.2 billion, up 6 per cent from Q2 and 9 per cent from a year earlier; server group revenue was $3.7 billion, up 5 per cent from Q2 and 16 per cent from a year earlier; and the new Internet of Things group recorded revenue of $530 million, down 2 per cent from Q2 but up 14 per cent from a year earlier.

Intel said it doesn't expect its mobile and communications group to be profitable in 2015, but it is making progress towards that goal. Some of its current products are sold at a loss but future versions such as the Sofia chip sets will narrow those losses, Smith said.

The 3G version of Sofia co-developed with China's Rockchip is running in the labs, starting validation and on track to ship before the end of the year, noted Krzanich.

Both the partnerships with Rockchip and with China's Spreadtrum are "focused on Sofia" making products that are "designed by people in that ecosystem and very cost efficient," he said.

Intel fielded many questions about its growth in PCs, which the company attributed to market share gains, better inventory management and other factors. Executives made it clear they still see the overall PC market as flat this year and long term with "stability in the U.S. and softness in China and South America," Krzanich added.

Speaking on process technology, Krzanich said in this quarter "14nm yields improved meaningfully but we remain behind where we expected to be."

Smith said the quarter also saw "the front edge of start-up costs associated with 10nm right in line with the historical trend."

By: DocMemory
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