Stefan Mileschin

Saving for a rainy day

Intel says it has been helped out by customers are so concerned about the trade war between China and US escalating that they are stockpiling chips in case there is a shortage.

Chipzilla forecast current quarter profit and revenue above estimates and raised its full-year revenue forecast on Thursday, alleviating concerns about a global semiconductor sales slowdown and curbs on US sales to China’s Huawei.

Research firm Gartner forecast a 9.6 percent drop in global semiconductor revenue in 2019, to $429 billion. US-China trade tensions, including tariffs on some products and the restrictions on sales to Huawei, are pressuring chipmakers.

But Intel’s chief financial officer, George Davis the company had resumed some product sales to Huawei that comply with US regulations, so that is not a problem. And tariff threats between the United States and China helped second-quarter sales by about $400 million,

“Customers concerned about supply risk in the second half of the year related to those items pulled in some demand into the second quarter”, Davis said in an interview. “It isn’t a net addition to the full year (forecast), but it certainly de-risks some of the full years.”

Intel reported second quarter revenue of $16.5 billion. Analysts on average had expected revenue of $15.7 billion.

Intel does not appear to be worried about losing ground to AMD, which is currently putting out better chips much cheaper. Intel said its third quarter revenue and profit forecast to be $18 billion above analysts’ estimate of $17.72 billion.

The company estimated 2019 revenue of $69.5 billion, instead of the $69 billion it told investors to expect in April. Chief Executive Bob Swan told investors on a conference call that Intel has two factories now producing 10-nanometer chips - the next generation of manufacturing technology which Intel has struggled to bring online - and said plans to produce 7-nanometer chips by 2021 remain on track.

https://fudzilla.com/news/49118-inte...ckpiling-chips