Thursday, July 25, 2019

Intel posts strong Q2 results, shipments to Huawei have resumed

Intel reported second-quarter revenue of $16.5 billion, down 3% year-over-year (YoY), but exceeding its financial guidance issued in April.  GAAP EPS was $0.92, a decline of 12 percent YoY; non-GAAP EPS was $1.06, up 2 percent.


“Second quarter results exceeded our expectations on both revenue and earnings, as the growth of data and compute-intensive applications are driving customer demand for higher performance products in both our PC-centric and data-centric businesses,” said Bob Swan, Intel CEO. “Based on our outperformance in the quarter, we’re raising our full-year guidance. Intel’s ambitions are as big as ever, our collection of assets is unrivaled, and our transformation continues.”

Some highlights:
  • The PC-centric business (CCG) was up 1 percent in the second quarter due to a strong mix of Intel's higher performance products, strength in the commercial segment, and customers buying ahead of possible tariff impacts. New, 10nm-based 10th Gen Intel Core processors (code-named "Ice Lake") are now shipping, and expected to be in volume systems on retail shelves this 2019 holiday selling season.
  • Collectively, Intel's data-centric businesses declined 7 percent YoY in the second quarter. In the Data Center Group (DCG), the communications service provider segment grew 3 percent while the cloud segment declined 1 percent and enterprise and government revenue declined 31 percent.  The Internet of Things Group (IOTG) achieved record revenue, up 12 percent YoY (23 percent excluding Wind River) on broad strength and increased demand for higher performance processors. 
  • Mobileye achieved second-quarter revenue of $201 million, up 16 percent YoY on continued customer momentum. 
  • Intel's memory business (NSG) was down 13 percent YoY in a challenging pricing environment. Intel's Programmable Solutions Group (PSG) revenue was down 5 percent YoY in the second quarter.

Some notes from the conference call:
  • Cloud customers are absorbing resources that were put in place over the past year. Intel expects demand from this sector to pick up in the second half of the year
  • Government spending was weak, particularly in China.
  • Trade uncertainty is driving pull-ins from 2H
  • Intel suspended shipment of products to "certain customers" that were added to the U.S. government entity list, but was able to resume shipments. The financial impact for the quarter was limited.
  • Further tightening of export restrictions could impact future results
  • 10nm FPGAs will be shipping in 2H19
  • Optane is gaining momentum
  • Snowridge silicon for 5G basestations will be in production early next year
  • The acquisition of Barefoot Networks was completed this week.
  • There are now 2 fab facilities on 10nm and 7nm is on track for 2021





See also