Intel Sales Forecast Weakened 2nd Semester In 2021

Chipmaker Intel Corp. said on Thursday it still faces supply chain constraints and gave an annual sales forecast that implied a weak end of the year, Stephen Nellis and Chavi Mehta reported for Reuters.

The 2021 forecast of $73.5 billion in adjusted sales was higher than Wall Street expectations, which appeared to be driven by a strong second quarter ended June 26 and a modestly better-than-expected third quarter, implying a weak fourth quarter. The results sent shares down 2.8% in after-hours trading after the results.

Intel, one of the few remaining companies in the processor chip industry that both designs and manufactures its own chips, has been able to weather the supply chain woes better than some rivals and is also working to build a business of making chips for others, called a "foundry" business.

Intel Chief Executive Officer Pat Gelsinger declined to comment on a recent report that Intel is looking to buy GlobalFoundries for $30 billion to bolster its foundry efforts but told Reuters that he expects industry consolidation to continue and that "M&A will remain a part of our strategy" for building the company's foundry business.

Intel raised its previous annual forecast $1 billion from its earlier $72.5 billion and beat expectations of $72.80 billion, according to Refinitiv IBES data.

Intel expects adjusted third-quarter revenue of about $18.2 billion, only modestly above estimates of $18.09 billion, according to Refinitiv data.

"I think investors simply expect more from semiconductor companies in this environment," said Logan Purk, an analyst at Edward Jones.

"Even though they did increase revenue guidance, it was only about a 1% increase. A bulk of the change in earnings guidance was due to a lower tax rate."

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