Thursday, July 18, 2024

Analysts: No Quarterly Surprises for Intel

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Intel is not expected to surprise investors for the rest of the company’s quarter.

Such is the rationale behind analyst comments Tuesday about the Santa Clara, Calif.-based chip making giant. The company is preparing to issue its mid-quarter update on Thursday, June 5.

The No. 1 chip company is currently forecasting its second quarter revenues between $6.4 and $7.0 billon with gross margins of about 50 percent. Some analysts say the gloomy economy can’t slow down the tech bellwether and the SARS epidemic is having literally no affect on Intel’s global sales.

“It doesn’t seem to have as big of an impact especially for a global player like Intel, which advised analysts two weeks ago,” Deutsche Bank Securities senior analyst Chris Avery told “SARS at this point depends on a company by company basis. For example on the other end, AMD will probably be more affected because it sells its chips in white boxes, which are big sellers in China.”

Avery also says Intel’s spring success is based on adoption of Centrino (partially fueled by faster chips) and improved Flash sales are helping to offset the normal seasonality and the SARS impact.

Currently, there are 58 different models of Centrino shipping compared to the 34 versions when the heralded chipset first came out. The company said it expects upwards of 125 designs to be available for sale by the end of the year. Intel says it is seeing vendors put its chipsets in systems ranging in style from tablet PCs to thin-and-light designs with large screens to ultra-mobile systems that weigh less than three pounds. In some cases these mobile systems can achieve greater than five hours of battery life on a single charge.

Compare that to earlier this year, when Intel had a glut of Flash memory. Analysts say Intel has the wherewithal to re-capture in the Flash segment. In fact, the only question at this point is whether or not Intel has extra PC processors on hand.

“There is no justification for an upside surprise, other than channel inventory expansion,” Deutsche Bank said in its briefing to investors.

Deutsche Bank said it also expects motherboard shipments to drop 12 percent quarter-over-quarter due in part to lower demand as a result of SARS, foundries are seeing continued strength in orders from the PC sector and Taiwan notebook shipments are expected to advance as much as 5 percent compared to previous quarters.

In related news, Intel said it plans on investing $100 million in Elpida Memory. The Tokyo-based company, which makes Dynamic Random Access Memory (DRAM) , said it will use the proceeds from the proposed investment and other financing increase production at its 300-mm, sub-0.11 micron DRAM wafer fabrication plant in Hiroshima, Japan.

Elpida is a joint venture company formed by NEC and Hitachi, and has been in operation since December 20,1999.

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