Intel Set To Take Gross Margin Hit Due To AMD Gaining Market Share – Analyst

Chipmaker Intel Corporation is expected to post weak earnings results today due to the ongoing chip shortage and strong competition from its smaller rival, Advanced Micro Devices, Inc (AMD). Intel, who is also expected to share more details soon for its push into contract chipmaking, posted an earnings guidance of $17.8 billion for its second quarter, or the quarter which ended in June. In a report that cites analysts polled by FactSet,

The Wall Street Journal

believes that the company will meet this guidance and post a net income of $4.2 billion to mark a roughly $1 billion year-over-year drop.

Intel Will Report Second Quarter 2021 Revenue In Line With Earnings Guidance Provided In Q1

In addition to reporting a potential drop in profit, The Journal also believes that Intel has experienced a drop in its data center sales during the second quarter. The reasons for the shortfall include a drop in the booing demand for the products witnessed in the immediate aftermath of the ongoing pandemic and stronger competition by Intel's main rival, AMD.

AMD 3D V-Cache Technology In Development for Years, Seen in Ryzen 9 5950X Sample

AMD is also the subject of an analyst note released by Citigroup's analyst Christopher Danely. Danely believes that tough competition from AMD will result in Intel posting weak outlooks. A

summary

of his note shared by ThyFly reads as:

Intel's guidance for its second quarter of 2021 was provided at the end of the first quarter financial results.

The $17.8 billion in net sales or revenue that the anal

ysts polled by FactSet expect Intel to post fall in line with the company's guidance for the previous quarter. At its earnings report for the first quarter, the Santa Clara chip giant had outlined that it expected to earn $17.8 billion in non-GAAP revenue. Analyst estimates are also generally non-GAAP. The Journal added that the analysts also believe that Intel will report $4.2 billion in profit or net income to mark a steep drop from the year-ago quarter's figure of $5.1 billion. Analysts polled by

Yahoo Finance

also have an average revenue estimate of $17.8 billion with a low-end estimate of $17.4 billion.

The primary competitive disadvantage being faced by Intel right now is its inability to churn out processors manufactured by leading-edge manufacturing technologies. Its only rival in the x86 microprocessor market, AMD, is perceived to have an advantage in this front as it sources its products from the Taiwan Semiconductor Manufacturing Company (TSMC). TSMC's latest process for personal computing products is its 7nm node, which is also believed by many to be technologically inferior to the similarly dubbed 7nm node from Intel.

However, Intel is yet to commence mass production of its 7nm processors, which will be extensively fabricated using extreme ultraviolet (EUV) lithography. While all semiconductors fabricated below 10nm use EUV, chip fabricators differ in the extent to which they use the low wavelength light. A higher usage reduces manufacturing complexity but requires more time to master, and a lower usage results in technological drawbacks.