Intel’s profit plunged 41% and revenue dipped in the first quarter of 2021, despite the company moving record PC volumes.
The company posted net income of $3.4 billion, down from $5.7 billion in Q1 2020, with revenue of $19.7 billion compared to $19.8 billion the year prior.
Revenue from Intel’s Client Computing Group (CCG) rose 8% to $10.6 billion, with the growth attributed to record PC, Wi-Fi and Thunderbolt volumes. However, sales for its Data Center Group (DCG) fell 20% to $5.6 billion, and revenue from its memory unit also dropped 17% to $1.1 billion.
New CEO Pat Gelsinger, who took the helm in February, said during an earnings call “2021 is shaping up to be the largest PC market ever. In fact, we shipped more notebook CPUs in Q1 than in any other quarter in our history.”
He added “we saw this as the bottom” for DCG revenue performance, and “we believe we’re on a path back to growth.”
“We had an extraordinary last year, and now customers are almost through the digestion of that, and we're starting to see signs that they want to start the next build phase in their cloud,” Gelsinger explained.
He noted it was already shipping its freshly unveiled data center chip to “more than 30 customers, including major cloud providers, communication service providers, enterprise and HPC customers.” A follow up data center chip called Sapphire Rapids is set to begin production “around the end of this year, and ramp in the first half of 2022,” he said.
For the full year 2021, Intel forecasts revenue of $77 billion and capex of between $19 billion and $20 billion.
Moor Insights and Strategy founder and principal analyst Patrick Moorhead told Fierce Intel had a “good quarter” overall, taking advantage “of the huge uptick in overall compute demand for computers.”
He noted the average selling price (ASP) for CCG products dropped “due to a mix shift to the lower end of the pricing spectrum,” adding “the company very well could have increased share in the space.” Moorhead continued “DCG ASPs declined as well, which I attribute to a combination to mix shift lower and competitive pressure.”
Daniel Newman, principal analyst at Futurum Research, similarly highlighted Intel’s PC performance in comments to Fierce, noting the segment “continues to be the big story” for the company. Specifically, he pointed out it reported “54% growth in notebooks, and shipped more units than any quarter in its history. This is a huge result, and continues to indicate Intel's strength and importance in the ecosystem.”
However, he said all eyes will be on Gelsinger as the company presses ahead with a transformation strategy outlined when he took over earlier this year. “No question, the street will be holding Intel and CEO Pat Gelsinger accountable at every turn, from its foundry strategy to its timelines on 7nm and beyond. Execution will be a key point for investors to watch,” he said.