Join Transform 2021 this July 12-16. Register for the AI event of the year.


Buoyed by strong continuing demand for PC semiconductors, Intel today announced flat non-GAAP revenue of $18.6 billion on a year-over-year basis that exceeded its previous guidance by $1 billion. Overall, Intel reported a net income of $5.7 billion, down 6% year over year.

In addition to increased demand for PC semiconductors, which remain in short supply, Intel reported that the decline in demand for semiconductors used in enterprise servers has reached the bottom. Intel is forecasting increased sales of semiconductors in servers in the second half of the year as the COVID-19 pandemic subsides to the point that IT organizations begin investing in datacenters again. Intel launched 3rd Gen Intel Xeon Scalable processors, code-named Ice Lake, this quarter. And the company is banking on driving server refreshes in the second half of 2021.

In addition, Intel is expecting to see increased demand from cloud service providers that are currently working through the massive amount of inventory they accumulated in 2020.

Regaining dominance over rivals

The bulk of the revenue Intel is forecasting will be generated by 10-nanometer class processors in 2021. Intel is increasing its cadence for transitioning to 7-nanometer processors as part of an effort to regain processing power supremacy over rivals, Intel CEO Pat Gelsinger said. This was Gelsinger’s first call with industry analysts since returning to Intel after several years of leading VMware as its CTO and then CEO.

“It’s amazing to be back at Intel, and Intel is back,” Gelsinger said.

Intel also launched an Integrated Device Manufacture (IDM) 2.0 initiative this quarter to address the current processor shortage. The company is opening foundries to partners that build substrates and other components it depends on to build processors. Additionally, Intel is codesigning processors with cloud service providers. It expects cloud service providers to begin increasing orders from next quarter.

In the meantime, strong demand for notebook PCs, in particular, has enabled Intel to weather the economic downturn brought on by the COVID-19 pandemic, as well as Apple’s decision to abandon Intel in favor of an M1 system-on-chip (SoC) architecture. The new M1 SoC architecture combines ARM CPUs with GPUs and other accelerators to deliver twice as much processing power as an x86 platform.

The push to gain market share

As demand for other classes of processors starts to increase, along with PC components, Gelsinger has promised Intel will be very aggressive at the expense of rivals that can’t match its manufacturing muscle. In addition, Gelsinger notes that Intel processors are now optimized for new classes of workloads based on AI models that need to first be trained by processing massive amounts of data and then deployed using inference engines that require maximum processor performance.

It’s not clear to what degree enterprise IT organizations are going to invest in 10-nanometer processor platforms when they know that systems based on next-generation 7-nanometer processors will become increasingly available in the second half of this year. Cloud service providers are also now making greater use of a wide array of processors to run workloads that might previously have been deployed on x86-based servers. Regardless of past missteps, Gelsinger said Intel is now better prepared to fight for control of every processor core being employed.

Overall, Intel is now forecasting $17.8 billion in revenue in the second quarter. This is despite the efforts of rivals such as AMD and Nvidia, which are unable to meet demand for processing horsepower now being driven by everything from gaming sites to digital business transformation initiatives that continue to multiply as the global economy improves.

VentureBeat

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact. Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:
  • up-to-date information on the subjects of interest to you
  • our newsletters
  • gated thought-leader content and discounted access to our prized events, such as Transform 2021: Learn More
  • networking features, and more
Become a member