Computer chips continue to be in incredibly short supply all across the country. Manufacturing issues combined with the pandemic led to a supply crisis amidst a surge in demand. Even halfway through 2021, the situation surrounding the chip industry hasn’t really resolved itself yet. In an interview, Intel’s (NYSE: INTC) chief executive warned that the global semiconductor industry could continue to see shortages well into 2023.
After Intel posted in Q2 results on Thursday, CEO Pat Gelsinger spoke in an interview regarding the state of the overall market. He argued that it would take around a couple of years for supply and demand to balance out, if not longer. Despite the fact that Intel and other chipmakers are adding new foundries, this new manufacturing capacity won’t be fully operational until at least a couple of years.
“The digitization of everything continues to accelerate, creating a vast growth opportunity for us and our customers across core and emerging business areas,” said Gelsinger in a statement Thursday. “We have a long way to go yet. It just takes a long time to build [manufacturing] capacity.”
Intel also reported its Q2 results on Thursday. The company managed to beat Wall Street’s expectations, reporting that revenue was around $18.5 billion, ahead of the $17.8 billion anticipated by analysts. Additionally, earnings per share came in at $1.28, once again beating out the $1.06 expected by Wall Street. What’s more, PC unit sales were up by over 33% compared to last year.
While all that’s good news, Intel also warned that it expects Q3 to have lower profit margins. The company said that it expects Q3 margins to come in at around 55%, slightly lower than the 59.2% seen in the second quarter of this year.
The ongoing shortage of chips has led to rising prices for certain consumer electrics. While computers, laptops, and smartphones have all seen prices go up, perhaps the hardest hit industry has been the auto sector, with many companies having to cut down production altogether. Volkswagen warned that the chip shortage would only worsen in the second half of 2021, with many carmakers having to drastically reduce manufacturing activity.
Shares of Intel were down around 2.0% on the news, with investors being disappointed that third-quarter projections have been dialed down. Since the start of 2021, Intel’s stock has gained 12.7%, mildly underperforming indexes like the Nasdaq.
Intel Company Profile
Intel is the world’s largest chipmaker. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It was the prime proponent of Moore’s law for advances in semiconductor manufacturing, though the firm has recently faced manufacturing delays. While Intel’s server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has stagnated. These include areas such as the Internet of Things, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, acquiring Altera, Mobileye, and Habana Labs in order to bolster these efforts in non-PC arenas. – Warrior Trading News
