Intel Corp (INTC.O) anticipated reduced profit margins for the next few years as it tries to reclaim a lead in creating the world’s fastest chips and ramps up new facilities, sending its stock down 9%. Sales of the company’s flagship processor chips also fell short of projections in the third quarter, according to Chief Executive Officer Pat Gelsinger, who told Reuters that shortages of other chips needed to manufacture computers are holding back sales of the company’s flagship processor chips.
Intel, the world’s largest maker of core processors at the heart of PCs and data center servers, said gross profit margins are anticipated to be between 51 percent and 53 percent in the next two to three years in a conference call with investors.
According to IBES statistics from Refinitiv, the prediction is considerably below the 56.2 percent that analysts expect for 2021.
The key reason, according to Gelsinger, is Intel’s ambitious aim to deploy many new chipmaking generations by 2025. In the beginning, all new generations of chipmaking technology are less efficient, but as chipmakers perfect their processes, they become more profitable.
According to executives, Intel’s turnaround plans call for working on several generations of technologies at the same time.
On the call, Gelsinger added, “We have a few more years to work through, but this is going to be a terrific outcome.” “We believe that right now, all of our aggressive lean-ins will be richly rewarded in the marketplace.”
According to IBES statistics from Refinitiv, Intel reported adjusted sales of $18.1 billion for the third quarter ended September 25, missing predictions of $18.24 billion. According to Refinitiv statistics, Intel posted adjusted profits of $1.71 per share, compared to Wall Street projections of $1.11 per share.
About 14 cents of the outperformance came from demand for higher-margin goods and operational advantages, while the rest came from one-time items like tax restructuring, according to Intel Chief Financial Officer George Davis, who will retire in May 2022.
