Intel Sees Strong Q3 Despite Poor Mobile Numbers
Intel also is partnering with Chinese chip maker Rock Chip, and in September announced it was investing $1.5 billion for a 20 percent stake in Tsinghua Unigroup, a state-owned venture in China that runs Chinese chip designers RDA Microelectronics and Spreadtrum Communications. Intel will leverage these partnerships to help push forward its mobile ambitions. "This should dramatically increase the use of Intel chips in the mid to lower end of the smartphone and tablet markets," Gold said. Krzanich also said the company was on track to hit its goal of selling at least 40 million Intel-based tablets for the year. Outside of the mobile business, Intel's quarter was very strong. The company sold a record number of chips for PCs, servers, tablets, phones and Internet of things (IoT) devices, marking the first quarter that Intel had shipped more than 100 million microprocessors. After several years of declining sales worldwide, the global PC market continues to stabilize, due in large part to the commercial space. Krzanich and CFO Stacy Smith said Microsoft's decision to end support of Windows XP in April contributed to that, though its impact is lessening as the year goes on. Other contributors are businesses replacing their older PCs and new PC form factors that are coming to market, such as two-in-one systems, they said.Gold of J. Gold Associates said he expects the upward PC buying trend among businesses to continue for at least another four to five quarters, though consumers sales will remain flat or slightly up. "But what this indicates is that the market for PCs is not dead," he wrote. "Intel’s bet on the new form factors like Ultrabooks and especially 2 in 1 devices is paying dividends. Indeed, while the sale of notebooks is picking up, the trend is downward for tablets, driven largely, in my opinion, by the desire of many users to obtain 'Nablet' devices (a combination device that takes the best of the notebook and tablet and combines them, a la the Microsoft Surface, and much like the 'phablet' did for phones)." Krzanich said he continues to expect to be able to grow the data center group revenues by 15 percent, and noted that the Xeon E5-2600 v3 "Grantley" chip—which was introduced in September right before the Intel Developer Forum and targets compute, storage and networking workloads—now accounts for 10 percent of the chips for dual-core systems the company ships.
In addition, mature markets like North America and Western Europe have seen strong sales, though developing regions have lagged. Consumer PC sales remain stagnant, the executives said.