Intel, the world's largest chip maker by revenue, reported a 22 per cent drop in fourth-quarter net profit due to "ecosystem constraints" as the company downgraded its sales guidance for the first quarter of the 2022 financial year.
Net profit for the last quarter ending on December 25 fell to $4.6 billion, from the same period a year earlier.
Revenue increased 3 per cent on an annualised basis to $20.5bn, the company said in a statement. It was the best quarterly revenue in the history of the California-based company.
The company’s full 2021 financial year’s net profit dropped about 5 per cent to $19.9bn, while sales increased almost 1 per cent to $79bn.
The company's stock plunged more than 2.5 per cent in extended trading to $50.3 a share on Wednesday.
The fourth quarter represented “a great finish to a great year”, the company’s chief executive Pat Gelsinger said.
“We exceeded top-line quarterly guidance by over $1bn and delivered the best quarterly and full-year revenue in the company's history,” Mr Gelsinger added.
The company also approved a cash dividend increase of 5 per cent to $1.46 per share on an annual basis.
In the fourth quarter, Intel spent more than $4bn on research and development activities, about 11 per cent more than the R&D spend of the same period in 2020.
Its operating income dropped about 15 per cent yearly to almost $5bn in the quarter.
In the October-December period, Intel generated $5.8bn in cash from operations and paid dividends of $1.4bn.
Intel said it expects the current quarter (Q1, 2022) sales to reach about $18.3bn, down nearly 1 per cent on a yearly basis.
Since Intel’s founding in 1968, it has been an integrated device manufacturer (IDM) — a company that both designs and builds its own semiconductor chips.
In March, Mr Gelsinger announced IDM2.0, a new model that includes significant manufacturing expansions.
“Our disciplined focus on execution across technology development, manufacturing, and our traditional and emerging businesses is reflected in our results. We remain committed to driving long-term, sustainable growth as we relentlessly execute our IDM 2.0 strategy,” Mr Gelsinger said.
The company, which employs 121,100 employees globally, had more than $2.1bn in cash and cash equivalents as of December 25.
Its client computing group (CCG), which produces chips for personal computers, added $10.1bn in overall sales in the fourth quarter — almost 7 per cent less than the same period last year.
The company earned $7.3bn from making chips for data centres, nearly 20 per cent up on a year-on-year basis.
Its Internet of Things group, which manufactures low-power embeddable chips, earned more than $1.1bn, almost 36 per cent more than the prior year period.
Sales of Intel’s autonomous driving subsidiary Mobileye were up about 7 per cent to $356 million in the three-month period.
Last week, Intel announced plans for an initial investment of more than $20bn in the construction of two chip factories in Ohio. The investment will help boost the production of chips to meet the surging demand for advanced semiconductors in the US, the company said.