Intel reports flat second-quarter profit but expects high chip demand

Chip maker generated $8.7bn in cash and paid dividends worth $1.4bn in three months

FILE - In this July 20, 2011 file photo, Intel corporate offices are seen in Santa Clara, Calif. Intel says it’s working to patch a security vulnerability in its products but says the average computer user won’t experience significant slowdowns as the problem is fixed. The chipmaker released a statement Wednesday, Jan. 3, 2018, after a report by British technology site The Register caused Intel stocks to trade lower.(AP Photo/Ben Margot)
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Intel, the world's largest chip maker by revenue, reported a mostly flat second-quarter net profit, although the company raised its full year 2021 guidance on strong demand for semiconductors globally.

The company’s net profit for the quarter ending on June 30 was $5.1 billion. Its revenue also remained flat at $19.6bn, the company said in a statement.

"There has never been a more exciting time to be in the semiconductor industry," said Pat Gelsinger, chief executive of Intel. He added that the company’s second-quarter results show that “momentum is building, our execution is improving and customers continue to choose us for leadership products".

“The digitisation of everything continues to accelerate, creating a vast growth opportunity for us and our customers across core and emerging business areas,” he said.

In the April-June period, the company generated $8.7bn in cash from operations and paid dividends worth $1.4bn.

“With our scale and renewed focus on both innovation and execution, we are uniquely positioned to capitalise on this opportunity … which I believe is merely the beginning of what will be a decade of sustained growth across the industry,” added Mr Gelsinger.

Intel said it expects third-quarter sales to cross $19bn and full-year revenue to hover around $77.6bn.

The company’s client computing group, which produces chips for personal computers, added $10.1bn in overall sales in the second quarter — almost 6 per cent more than the same period last year.

Intel experienced a dip in the average selling price of PC chips during the quarter and Mr Gelsinger said the company had struggled with chip shortage, but added that it should “bottom out” in the second half of the year.

The company earned $6.5bn from making chips for data centres. However, it was 9 per cent down on a year-on-year basis.

Its Internet of Things group, which manufactures low-power embeddable chips, earned $984 million, almost 47 per cent more than the prior year period.

Sales of Intel’s autonomous driving subsidiary Mobileye were up 124 per cent to $327m in the three-month period. This week, the company said it is testing self-driving vehicles in New York City.

Semiconductor chips are particularly important components for electric and self-driving vehicles. They are used to manage features such as navigation and parking sensors as well as to monitor engine performance.

In April, Mr Gelsinger said the California-based company plans to manufacture in-demand semiconductors for cars to alleviate the shortage that has hobbled the industry worldwide. Intel is in discussions with other entities that design components for car makers to allow them to manufacture chips inside Intel’s factory network.

Updated: July 29, 2021, 5:47 PM