Intel reported better-than-expected overall sales for the second quarter, but came up short of targets for the data center product category and disclosed that new 10nm chips will hit PCs on store shelves in time for the 2019 holiday season.
Bob Swan, Intel's chief financial officer who has been serving as the company's interim-CEO since Brian Krzanich resigned last month, told analysts on a conference call following the second quarter report Thursday that Intel thinks its 14nm product lineup for next year on both the client and server side "will deliver best-in-class performance as we continue to ramp 10nm."
Intel has been dogged by yield issues at the 10nm node, causing the company in April to delay the launch of 10nm products until next year.
Venkata (Murthy) Renduchintala, president of Intel's Technology, Systems Architecture & Client Group, added that the 10nm yield difficulties are the result of very aggressive density scaling from the 14nm node.
"Really, the challenges that we're facing on 10nm are delivering on all the revolutionary modules that ultimately deliver on that program," Renduchintala said. "And while there's risk and a degree of delay in our timeline on that, we're very pleased with the resiliency of our 14nm roadmap, where in the last few years we've delivered in excess of 70% product performance improvement as we've moved through our 14nm generation of products."
He said on the call that 10nm data center chips will be released "shortly after" the consumer PC chips.
Earlier this week, Qualcomm executives said they believed Apple had selected Intel to be the sole supplier of modem chips in the next generation of iPhones.
Last quarter, the company said the 10nm chips were being pushed from 2018 to 2019 but did not specify when. Intel originally predicted the chips could be ready by 2015.
But costs of the 10nm chips are also expected to put pressure on margins, company executives said. Another challenge to margin growth is an expected increase in sales of Intel's less-profitable modems that help mobile phones connect to wireless data networks.
Earlier this week, Qualcomm executives said they believed Apple had selected Intel to be the sole supplier of modem chips in the next generation of iPhones.
For the second quarter, Intel reported sales of $17 billion, up 15% from the year-ago quarter. The company reported a net income of $5 billion, up 78% from the year-ago quarter.
The company's overall sales exceeded its own target, with the data center sales to be $550 million, up 27% year-over-year, but slightly below forecasts.
Intel said it now expects its data center sales to grow by 20% this year, up from the forecast issued in April.
AMD, which has been gaining ground with its new server chips, beat estimates for quarterly profit and revenue on Wednesday, powered by its EPYC server processors.