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Intel reported strong fourth-quarter earnings and revenues that beat Wall Street’s expectations today. And Bob Swan, CEO of the biggest maker of PC and datacenter processors, said in an analyst call today that the company had gained market share and was confident in its future.

In 2019, Swan said Intel generated $3.8 billion in AI-based revenue. The AI market opportunity is expected to be $25 billion by 2024.

This comes after some rocky moments for Intel in the past couple of years. It changed CEOs, ran into delays in developing its critical 10-nanometer (nm) manufacturing process, wasn’t able to produce as many chips as its customers wanted, and faced serious competition from rival Advanced Micro Devices and Nvidia in datacenter and AI chips.

But Intel reported that its PC business grew 10% and overall revenues were up 8% to $20.2 billion in Q4. It also beat analysts’ earnings estimates. Intel’s stock price rose 5% in after-hours trading to $66.64 a share.


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Meanwhile, separately, Intel confirmed that it is reorganizing its datacenter products group and laying off some employees. It did not say how many, except that it was less than 1% of the workforce, which means it is less than 1,100 employees.

In a statement, an Intel spokesperson said, “Changes in our workforce are driven by the priorities of our business, which we continually evaluate. As we move into 2020, our business units are focusing their resources on areas where we have the greatest opportunity for growth and, as part of that, some are planning to eliminate roles associated with projects that are no longer priorities. Wherever possible, we’ve transitioned employees or teams within the company to areas of business need, and we expect this to impact less than 1% of our global workforce, subject to local requirements. We are committed to treating all impacted employees with professionalism and respect, and we continue to hire for critical skills, with more than 1,300 positions open in our key locations in the U.S. and globally.”

Intel CEO Bob Swan at CES 2020.

Above: Intel CEO Bob Swan at CES 2020.

Image Credit: Dean Takahashi

Swan said more than 50% of Intel’s revenue is defined as “data-centric,” meaning it focuses on processing, managing, and storing the massive amount of data being produced from our social media, smartphones, cars, internet of things, and computers.

“Our journey is just beginning,” Swan said. “To reach our multi-year goals, we will continuously focus on three key priorities: accelerating growth, improving execution, and deploying our capital for attractive returns.”

He said demand for the second generation of Intel Xeon Scalable processors is very strong as customers continue to make Xeon the foundation for their AI-infused datacenter workloads. Intel’s fastest-growing processor is the Cascade Lake family, which focuses on AI performance, and that will get a boost in the first half of 2020 with the launch of the third-generation Xeon Scalable processor, Cooper Lake, Swan said.

He said that in the PC market, Intel saw “excellent momentum” for its 10-nm mobile CPU, Ice Lake, with 44 systems already shipping.

At the CES 2020 tech trade show, Intel also showed customer momentum for the Project Athena innovation program, including the first Project Athena-verified Chromebooks. Twenty-six Project Athena designs have been certified, and 50 more are expected to be verified this year.

Intel generated $5 billion in 2019 revenue, and Swan said the opportunity for growth is good as networks converge on 5G wireless connectivity.

Swan said that Intel plans to spend $17 billion on capital expenditures in 2020, following record investments in capex for the past two years. The added capacity allowed Intel to expand its PC CPU supply in the second half of 2019 by double digits relative to the first half.

Intel CEO Bob Swan speaks with reporters in Palo Alto, California.

Above: Intel CEO Bob Swan speaks with reporters in Palo Alto, California.

Image Credit: Dean Takahashi

However, he acknowledged that demand has continued to outpace PC supply, and supply remains tight in the PC business. Intel continues to add capacity at both the 14nm and 10nm manufacturing nodes.

“We continue to make real good progress on yields on 10nm,” he said.

The investment should help increase PC unit volumes by high single-digit percentages. Intel has also begun work on its 5nm process technology. The intention is to get to two-year intervals between each generation of process technology, Swan said.

“This will enable us to meet market demand, deliver our 2020 financial plan, and increase inventory to more normalized levels,” he said. “Our near-term challenge is working with our customers to support their desired product mix.”

He said yields are improving on 10nm production, which has bedeviled Intel for a while. He said Intel is planning nine new 10nm product releases this year, including Intel’s first standalone graphics processing unit (GPU). Intel will bump up the production with 10nm+, and he said 7nm production is on schedule for the end of 2021.

Bob Swan is CEO of Intel.

Above: Bob Swan is CEO of Intel.

Image Credit: Dean Takahashi

Intel closed the year with 110,800 employees, compared to 107,400 a year ago. For the full year, Intel expects to grow revenue from $72 billion in 2019 to $73.5 billion in 2020.

“We feel great about how we wrapped up the year with the best quarter in the company’s history. 2019 was the best year in our company’s history and our outlook,” Swan said. “In 2020, we’ll do it again. We expect it to be another record year. And our ambitions have just never been greater.”

Asked how the company would deal with increased competition, Swan said that Intel would likely address shortages in 2020 and that should result in market share gains, particularly as it goes after a much larger market for its chips.

[Updated 5:07 p.m. Pacific 1/23/20: Intel confirmed layoff information for us after the call, which did not mention the layoffs.]

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