Why is Intel missing revenue and profit estimates?

Intel is facing challenges in matching its supply of traditional server chips to the rapidly increasing demand from AI data centers.

How is the AI boom affecting Intel's server chip business?

The AI boom has led to a surge in demand for server chips used in data centers, but Intel is currently struggling with supply chain constraints to meet this demand.

When does Intel expect its supply issues to improve?

Intel's CFO stated that they expect available supply to be at its lowest in Q1, with improvements anticipated in Q2 and beyond.

Home / Business and Economy / Intel Misses Estimates Amid AI Server Chip Shortage

Intel Misses Estimates Amid AI Server Chip Shortage

23 Jan

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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 Misses Estimates Amid AI Server Chip Shortage

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.