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Intel Misses Estimates Amid AI Server Chip Shortage
23 Jan
Summary
- Intel forecasts Q1 revenue and profit below market expectations.
- AI data center demand is straining Intel's traditional server chip supply.
- Company sees potential improvement in supply by Q2 after Q1 lows.
Intel's financial outlook for the first quarter has fallen short of market expectations, primarily due to challenges in meeting the surging demand for traditional server chips essential for artificial intelligence data centers. The company projected Q1 revenue between $11.7 billion and $12.7 billion, with adjusted earnings per share expected to break even, both below analyst forecasts.
This situation arises as large tech companies scramble to upgrade their chip fleets to support burgeoning AI businesses, a demand that has outpaced supply. Intel's chief financial officer noted that available supply is expected to be at its lowest in Q1 before improving in the second quarter and beyond. This comes as the company navigates industry-wide memory chip shortages that also impact PC pricing.
Despite these short-term supply constraints, Intel is pursuing a turnaround strategy focused on cost-cutting and optimizing its product roadmap. The company has also made strides with its new "Panther Lake" PC chips, utilizing its 18A manufacturing technology, though initial production yields have presented challenges. Recent years have seen significant investments from Nvidia, SoftBank, and the U.S. government, bolstering confidence in Intel's revival efforts.
