Intel sees sales picking up in coming years as it makes comeback

[SAN FRANCISCO] Intel expects revenue to rise by a percentage in the low single digits this year, with growth picking up in later years as chief executive officer Pat Gelsinger pursues a turnaround of the chipmaker.

Sales will climb by a high-single-digit percentage by 2023 and 2024, the company said at an investor event in San Francisco. Analysts have been predicted growth of 1 per cent this year, with sales ticking up 3 per cent in 2023 and 8 per cent in 2024.

"I feel confident in our plan to accelerate and deliver," Gelsinger said at the event.

So far, Intel has struggled to capitalise on booming demand for chips - a surge fuelled by the work-from-home trend and the spread of semiconductors into a wider range of devices. While the chip industry's sales gained 26 per cent last year to a record total of US$556 billion, Intel posted a 4 per cent decline.

The company's rivals, meanwhile, have been flourishing. Advanced Micro Devices' sales grew 68 per cent last year, and Nvidia posted a 61 per cent gain. Those companies are on course to expand sales more than 25 per cent again in 2022, according to analysts' projections.

The biggest chunk of Intel's sales still comes from the personal-computer market, where its processors remain the most important component of the majority of laptops and desktops. Last year, PC shipments climbed back to levels not seen for a decade, helped by the shift to remote work.

But analysts have expressed concern over whether that will continue. And Intel is facing fiercer competition from AMD, and some customers - like Apple - are switching to their own chips.

Gelsinger took over the top spot at Intel a year ago, rejoining the chipmaker after about a decade's absence. The company's leading executives are explaining to investors Thursday how they will restore Intel's dominance in the semiconductor business.

The 60-year-old has outlined a plan to spend tens of billions on new factories that will put him in direct competition with outsourced manufacturing providers such as Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co.

At the same time, he's shaking up Intel's internal production technology operations and is targeting a return to leadership by 2025. The company is also entering new markets such as graphics chips where it will go head to head with AMD and Nvidia.

Intel said Thursday that its graphics chip business could approach US$10 billion by 2025. Its outsourced chip business, meanwhile, is still in the early stages - "just beginning", Gelsinger said.

Intel announced the acquisition of Tower Semiconductor this week to help shore up the operation. Investors have been skeptical. The company's shares fell 23 per cent in the past year, trailing most of their peers in the Philadelphia Stock Exchange Semiconductor Index. And the stock has declined sharply each time Intel has reported earnings - a sign investors aren't happy with the progress they're seeing.

Against that backdrop, Gelsinger assured shareholders that his comeback is taking hold. "The Intel turnaround train is leaving the station and I hope you all get on board," he said. BLOOMBERG