Intel Reports Q2 2021 Earnings: Client Computing Leads the Wayby Ryan Smith on July 22, 2021 6:00 PM EST
- Posted in
- Financial Results
Kicking off another earnings season for the tech industry, we as always start things off with Intel, who is the first big chipmaker out of the gate. Over a year into the coronavirus pandemic – and slowly heading out of it – Intel has seen its ups and downs as product demands have shifted and the company’s ability to execute over the long term has been challenged by fab delays. Following a particularly painful (by Intel standards) first quarter, the company is hoping to put those problems behind them with a stronger second quarter.
For the second quarter of 2021, Intel reported $19.6B in revenue, a decline of less than $100M versus Q2’20, and what Intel is calling a flat difference overall. More importantly, perhaps, is that Intel’s profitability has also held quite steady (and significantly improved over Q1), with Intel booking $5.1B in net income for the quarter, a YoY decline of 1%. Overall, with a lone caveat, Intel’s Q2 performance has exceeded their earlier projections.
Intel’s famed gross margin has also recovered on both a quarterly and yearly basis. At 57.1% it’s up almost 2 percentage points higher than Q1, and almost 4 percentage points higher than Q2’20. Intel’s gross margin has been subject to greater than usual fluctuations as of late – typically dropping whenever a major new product is ramping – but at least for Q2 it is on the rise as Intel enjoys a very profitable quarter.
|Intel Q2 2021 Financial Results (GAAP)|
|Client Computing Group Revenue||$10.1B||-5%||+6%|
|Data Center Group Revenue||$6.5B||+16%||-9%|
|Internet of Things Group Revenue||$984M||+8%||+47%|
|Non-Volatile Memory Solutions Group||$1.1B||flat||-34%|
|Programmable Solutions Group||$486M||flat||-3%|
Breaking things down on a group basis, there are a couple of major points to immediately take away. The first is that, while still recorded per Generally Accepted Accounting Principles (GAAP) rules, Intel is all but ready to cut loose its NAND memory business, which it’s in the process of selling to SK hynix. That said, the deal has not been approved and a closing date has not been set, so while Intel is opting to exclude it from their non-GAAP results (and future business projections), they aren’t free of it quite yet.
Second, this is the first full quarter that can be used for year-over-year comparisons with the coronavirus pandemic. While Intel’s manufacturing side has long since stabilized there, year-over-year numbers are sometimes in odd places as the demand mix a year ago was very unusual, to put it mildly.
For Q2, Intel’s Client Computing Group was once again the biggest winner; that division pulled in $10.1B in revenue, and is up 6% YoY. According to Intel, both laptop and desktop revenue is up, as Intel has surpassed shipping 50 million Tiger Lake processors. That said, these revenue gains are largely volume-driven; ASPs for both desktop and mobile are down, due in part to what Intel is noting to be increased sales of low core count processors. Intel’s improving fab situation has also played a part here – according to the company, 10nm production costs have dropped, helping to improve the division’s operating income.
Meanwhile Intel’s Data Center Group is really starting to feel the impact of the increasingly competitive server environment. While revenue was up 16% versus Intel’s tough Q1, it’s still down 6% on a yearly basis. Breaking that down further, both cloud server provider and communication sales are down, buoyed somewhat by an uptick in enterprise and government sales. But with chip volume and ASPs both down a bit, group revenue can only fall. Intel has long wanted to get away from CCG leading the company’s earnings – in big part by growing its server revenues – but for the moment it looks like that won’t be in the cards. Though as Intel continues to ramp up 10nm production (and thus Ice Lake Xeon production) there is some opportunity to recover in future quarters.
As previously mentioned, Intel is looking to cut loose its NAND business, which is now the only part of the company’s Non-volatile Solutions Group (Optane is DCG). None the less, for the moment Intel still has to account for the group’s revenue, which is down 34% on a yearly basis. Because Intel is downplaying the group so much, they aren’t offering any meaningful written commentary on why revenues are down, but it would seem to be pandemic-related. NSG recorded a very big bump in revenue a year ago, and things have since fallen back towards the industry baseline.
Rounding out Intel’s remaining divisions, both the ioT and Mobileye groups are up significantly on a yearly basis, with revenue jumping 124% in the case of Mobileye. Both groups are benefitting from the post-pandemic recovery, as well as additional design wins in the case of Mobileye. Otherwise, Intel’s final group, Programmable Solutions, saw revenues decline a few percent due to what Intel calls “inventory digestion and supply constraints.”
Overall, Q2’2021 marks a better quarter for Intel on both a quarterly basis and a yearly basis. Along with recovering from their tough Q1 three months ago, Intel this year isn’t facing another fab delay, as Intel’s big 7nm delay was first announced as part of their Q2’20 earnings. To be sure, the company is essentially flat on revenue and profit on a yearly basis – while its competition has generally grown – but as Intel gets further into CEO Pat Gelsinger’s tenure, there is increasing confidence that Intel will hit its goals (and a decreasing window to miss them).
Looking forward, based on their stronger-than-expected Q2 performance and optimism about Q3 and beyond, Intel is increasing its full-year guidance. The company is now projecting revenue to grow on a yearly basis, while gross margin projections remain unchanged at 56.5%. With that said, Intel’s projections all exclude their NAND business, with the company assuming that the deal will be approved by regulators this year as originally planned.
Finally, the next big business update from Intel will come on Monday, when Intel hosts its Intel Accelerated event. That webcast will be focused on Intel’s process and packaging roadmaps, and is a big step in Intel’s efforts to establish their IDM 2.0 strategy. We’re hoping to see more on Intel’s 10nm and 7nm roadmaps there, as well as more on Intel’s next-gen packaging technologies. In the meantime, Intel’s efforts seem to have at least caught the collective ear of Silicon Valley, as the company has revealed today that they’re in talks with 100 potential foundry customers.
Post Your CommentPlease log in or sign up to comment.
View All Comments
sgeocla - Thursday, July 22, 2021 - linkI see multiple websites posting Intel results without ever mentioning the tax rate change.
Seems like Intel prepared the slides to share in such a way to hide their non-GAAP numbers.
Old Intel behaving like old Intel. Some things never change, even with Pat in charge.
msroadkill612 - Friday, July 23, 2021 - linkIntel guided to non-GAAP gross margins of 55% in Q3, a notable drop from 59.2% in Q2.
down 3% after hours I hear - the markets dont seem as kind as most analysts
TheJian - Friday, July 23, 2021 - linkHow many times do I have to say it? AMD isn't winning people. Get out of the shares before you get killed. AMD has about a 12-18 months left before 3nm Intel server and laptop chips are coming from TSMC to take out AMD 5/4 nm and GPU's in full swing on 6nm first (not enough gpus, Intel won't even have to discount them for a while because we NEED MORE GPUS). Even apple made a mistake here by allowing Intel to purchase what will likely be ALL of the 2nd batch of 3nm (apple gets the first by paying for part of the NODE R&D). IF I was pat, I'd buy ALL 3nm I could for 1-2yrs so AMD, apple, Nvidia all can't launch 3nm. I hope he sealed it ALL up for at least a year+. Business IS WAR, and WAR is hell. Lisa Su doesn't know how to win this almost 5yrs in (Ryzen came Mar2017, that is 4.3yrs of PEANUTS) and NO drop in Intel NET INCOME, no drop in revenue etc (as Intel said basically FLAT, which is OK for 4yrs of fab loss). I would have ONLY made server HEDT to kill you (attack CASH cows to bring down the enemy R&D, NET etc, the IMPORTANT CRAP!). Revenue means nothing without NET INCOME on said revenue.
While AMD was "WINNING" for the last 4.3yrs, INTEL made 73B NET INCOME, NOT REVENUE. They are pulling down 21B a year for 3yrs (looks like a 4th coming in 6 months) while IN a shortage, and LOSING cpu race for all 4 years.
HOW is this insanity possible? Simple: CONSOLES eat NET INCOME via pissing away the best WAFERS on PEANUT margins. IE, even MSFT/SONY lost 3.5B EACH on Xbox/ps3 (well sony hit 4B+ IIRC, see kotaku, vg247, etc). Probably the same on PS4/Xbox1 once we have all the data at EOL.
Can't wait to see PS4/Xbox1 data. These just need to die until AZ fabs are online for both TSMC/Intel or just quit them totally forever and let NV/Nin make stuff that doesn't compete for the best wafers (switch isn't using 3nm for ages - cost prohibitive for a while). Switch currently uses 10nm samsung IIRC. Don't quote me, just saying, not exactly 5/4/3nm yet.
Clearly APPLE gets no favoritism for paying for the node or TSMC (you'd think!) would have told Apple, uh, we don't want to help Intel kill AMD, we don't want to help someone who is coming DIRECTLY at us with IDM 2.0 fab model (fabbing for others, directly competing with TSMC while buying wafers there to hurt AMD/NV/Apple...LOL), and we thought we'd give you the chance to BUY ALL 3nm so Intel can't at least until AMD can afford them too. But hey, maybe apple said, No thanks, let Intel buy them? I don't believe that given they had to DELAY 3nm launch of new macs and go to 4nm because not enough 3nm for apple to launch MAC desktops to replace Intel chips in them. Get the point people?
Intel is now run by a CEO who should have been there 16yrs ago and they wouldn't be behind on FABS, they'd be dominating STILL. MANUFACTURING is KING (like tesla, he doesn't make cars, he is a manufacturing powerhouse that will kill car makers, batteries, cable/cell companies etc...), and if you're the best, it is almost impossible for someone to catch you without massive investments (TSMC, SEE AMD losing fabs due to 3.5x paid for ATI - boom idiots). Pat is a guy who thinks BLUE CRYSTALS are BS (probably would fire marketing given the chance and work like elon, good products sell themselves), and manufacturing/FABS are KING coupled with GREAT engineering your competition is put in a very difficult position and usually REQUIRES partners to HOPE they can gain ground on YOUR manufacturing VERTICAL integration prowess. The more you can make in house (like samsung, 68% comes IN HOUSE for galaxy), especially on a massive scale, the easier it is to keep margin high, completely damage your competition by buying THEIR ability to produce chips and calling those wafers YOURS instead (to encroach on GPU now in this case with Intel).
You only need to break even and make a tad of profit for it to be completely legal (or milk that cow, and do more R&D, open more fabs, etc). The other side however, can't make a dime now until you run out of WAFER funding money...LOL. Intel won't run out at 21B yearly. Look at AMD NET INCOME for 15yrs.
I would outbid AMD/NV for a year+ launching my gpus. ALL of those wafers (if desired) on 3nm could go to the best gpus out there on 3nm (HEDT/SERVER/AI/DC gpus and maybe 3070+ types?) without anyone else on TSMC 3nm for gpu for a year or more. Maybe apple outbids you on some if not all sealed up totally already. If it is 3nm TSMC gpus vs. AMD/NV/APPLE gpus from samsung fabs, TSMC INTEL GPU's win. Any argument here? Not to mention they ALL have to go with WORSE processes to fight you with while you ADD to your NET INCOME at the bottom doing it.
Your own guy, Ian talking about Intel hiring massively experience engineers at 2:04 in the vid (4:09 is the list of engineers!). Pause it when he gets to the list of engineers with yrs experience and where they're from/what they worked on. I'd say they're hiring multiple full teams and don't agree with IAN as many are EX Intel rehires. These guys will likely be POINT men on the designs (leaders, managers of the projects etc) and 8 have 22yrs+ making chips (many 30yr+ 5 total! and 6 Intel with 22+ - Those people know PAT very well! They came back to DOMINATE). People are coming OUT of retirement to work with an ENGINEER CEO who shuns marketing BS for PERF and FABS and knows how to PRICE WHAT THE MARKET WILL BEAR!
AMD needs to stop making consoles and start turning those wafers into HEDT/SERVER cpu/gpu. Meaning stop selling crap that makes PEANUT margins. That is Console socs, where AMD said they make single digit to MID teens which means LESS than 15% or you'd say 15% because it is MORE accurate if true. Those should be making $1000's per chip, NOT $10-15 on a chip that costs $100-130 in a WAFER SHORTAGE (IDIOTS, AND Lisa Su makes 59M yearly while pulling down a measly 500mil or losses for AMD - check NET INCOME macrotrends link below). Meanwhile AMD has been "winning" for 4+yrs and STILL hasn't figured out you need to make KINGS and price for NET INCOME. Price what the market will BEAR always! If competition is behind, you ADD ON TOP of your last release and DO NOT LOWER PRICING on older cards. Instead you stack HIGHER with no price cut until forced by competition. Chasing the poor is stupid unless you have already soaked the rich completely. I wouldn't make a POOR chip in a wafer shortage until the EXPENSIVE stuff could no longer be sold and 1 chip (ok a few, you get the point) is left on the shelf. OK, FINALLY, time to make lower end cpu/gpu, but still not console until THOSE are finally sitting on shelves and not selling.
You can't take down Intel NET income because you can't make enough crap to take down their sales. PRICE wars are INSANE in a shortage...LOL, especially for the SMALL guy in the fight (goodbye R&D increases, goodbye NET INCOME, higher WAFER bidding, etc). EVERYONE should be pricing what the market will bear in a SHORTAGE (for massive R&D when shortages end later) and avoiding making ANYTHING for peanut margins in this timeframe.
IE, if NV can sell a 3090 and they leave as fast as you make them (in a shortage especially), I wouldn't make a 3080 until ONE 3090 is STUCK on shelves, regardless of ANYTHING else, and the poor can wait until next year or rearrange their budget (see below). See Intel leaving celeron types MISSING from Dell/Lenovo/HP etc desktops. They shorted 10% of their own customers to make high MARGIN products to defend net income, margin, share price etc.
You want a better chip, or are mad about HIGHER prices and no low end? Get a better job because AMD needs NET INCOME, so upgrade your life, cancel cable TV for a year and switch to something like TING where you pay as you go ONLY for what you use. BOOM, new PC yearly, so just get 30Mbps's cheap internet and you can run multiple TV's streaming 1080p etc. 12mbps is 4k IIRC on something like netflix, so do the math. IIRC 1080p is basically 6Mbps (killed netflix ages ago, too much SJW, never going back to support MORE of that crap), a decent experience would be 20Mbps for 3 1080p TVs. Go below that and you may get hitches here and there in a seriously complex scenes. But the point is, you are saving a ton of money on Cutting the CORD and monthly wasted cell bills. FREE PC parts or in many cases like us, a complete PC if desired yearly.
For instance: IN our case, Cable TV used to be $130 monthly. Now $80 for FASTER (60 vs 50Mb/s now), unlimited business account that has a 24hr repair service, meaning, they have to get your business back up quicker than residential crap. We also get a static IP, or any time desired can switch to dynamic for whatever is needed. Nice for many things you don't want to do on your BIZ IP (among other things). We used to have netflix, cancelled for hallmark, but now going to FRNDLYTV for stuff hallmark doesn't give on their own channel (hallmark movies now). We'll get 3 hallmark channels, Curiosity, UpTV, Dove channel, etc. We call it the Christmas channel (they will have the most selection of the new ones on FRNDLYTV this year IMHO). My retired parents LOVE repeatedly watching them for stress...They get laugher and joy from them and are happy every day watching that stuff or mysteries with fav actor/actresses etc. FAR cheaper than netflix and they can't keep up with content etc. Roku/Tubi are other main FREE sources (ads like normal TV but only 1-2 at night etc sometimes) and even youtube has many FULL HD christmas movies that are FREE (a bit of a search to find CLEAR 1080p etc, but they are there).
So we went from $130+$14 (Netflix)+$75 for ATT cells. Now Ting is $18/mo (always have minutes left), cable is $80/mo and FRNDLY is cheaper bought yearly at $6.66/mo ($80 at once) vs. regular $8 monthly. So $105 vs. $229 per month now. $1488 per year saved. BOOM, new PC or expensive gpu/cpu yearly. That is a $700 cpu and gpu yearly. GET SMARTER WITH YOUR MONEY! In a pinch with 3 people, you get 2 streams on FRNDLY (19 channels, Recipe, Outdoor, sportsman, fishing channel, and weather, etc) and the 3rd person maybe watches youtube, Roku or Tubi instead. Nobody can keep up with all the content in our family ever. Perhaps because we don't spend all day watching shows? You decide, but content isn't a problem yet, though it was on hallmark channel alone, where they give the last season of good witch or when calls the heart and missing ALL others. So you can't see the whole show, and 1/2 of Christmas movies ruined last year. They said they were making double movies, but they all were not REGULAR xmas movies on hallmark but rather 2bit directors, no budget, many looking like a soap opera not like a movie (like home cam crap) and ALL that SJW throughout them.
Hallmark itself, is NOT a good deal now, so we move to FRNDLY with 3 hallmark channels netting ALL of their stuff we hope. We're all about to sign up for Christmas season after dumping SJW hallmark (1/2 Christmas movies were BAD gay guys acting straight who seem repulsed by kissing a chick, Women who look like they don't want to kiss a guy who sucked a dirty....last night etc LOL..I couldn't do it either if I was a chick, no shame girls...ROFL), might as well get far more for a few dollars/mo more so we can just avoid SJW crap completely via other channels mixed in - (Frndly has ~19 or so channels and Dove, UPtv, have Xmas stuff too yearly, and BYU content now added, comedy, starting movie making now etc at BYU -MORE clean content here).
Don't complain about part prices when you are LIVING beyond your means stupidly as it is. Cut like we did for a YEAR and go back to expensive stuff for 2yrs again if desired AFTER you get that PC upgrade, or simply CUT all normal cords like we did FOREVER and ENJOY yearly Christmas gifts to yourself/family that most of you complain about. You don't have to waste money now, you're welcome.
Do what you have to do to acquire new pc parts without breaking your budget yearly. I just showed you some simple crap that WORKS for $1500 a year for our family in ANY of our houses. We all saved a bunch and PC parts (at least a gpu/cpu yearly updated) are nothing now. We could afford them already, but, now, $1500 yearly is FREE as far as we are concerned in our budgets. Add your kid to Ting and limit minutes. Done, now they can't ruin your monthly bill. :)
Hopefully the whiners are done whining about pricing, and hopefully AMD reads this and kills consoles. Risk the suit. A lawyer should have no trouble making the argument that making consoles in a shortage is keeping AMD from hurting Intel and KILLING their bottom line. I'd take the suit out for a decade if needed and make BILLIONS during that time. The suit would be peanuts, as nobody makes money on the hardware anyway, so how much did you lose if I cut you off? I'd take that case every day in court with a JURY (do not settle, go to JURY) of 12 people who will see MSFT/SONY picking on LITTLE AMD who can't make a dime while winning for 4yrs in cpu! No one time tax breaks helping you to a billion year don't count. They went right back to CRAP NET INCOME again the quarter after it (they had 500mil back in Q1 2011, 1B+ NET Q4 2009, and that's about it...LOL) Why are you not DESTROYING ALL previous net income records? 4yrs of victory? Why are you not making 4B NET INCOME on 20% if x86 cpus (forget they make GPUS, you should be making this on CPU alone!)? INTEL makes 21B on the other 80% so...Do the math and sell your shares. See macrotrends and choose Quarterly rather than yearly for that data (everyone should read that data on every stock they own, and more - 15yrs to assess what they are REALLY worth backed by data!). See AMD 2021 vs. 2009 AMD NET, outsanding shares (DOUBLED, so half their 2009 value already, 1/3 value of 2005, but chose 2009 for direct NET INCOME comparison easily etc), 1/2 assets (until this years tax break etc), etc etc. I could go on all day here, can't wait for AMD report. I suspect they may finally hit 1B NET again like Q4 2009, but 4yrs too late (you should be $25B+ richer now, you are not prepared, stupid.). This is not rocket science people.
You could be a millionaire simply investing in S&P 500 index funds for 45yrs from high school. If you can hang out 2 more years, you are a multimillionaire on a Macdonalds job putting ~200/mo away for decades in a ROTH IRA (can put 6K a year in tax free, or 7K if 50+yrs). INTEREST FREE earnings for 45yrs. RETIRE at 65 and laugh at making 100k a year or so on 2mil in dividen stocks and S&P splits to your liking. People need to stop thinking SHORT TERM. Amazing EVERYONE isn't forced to get this before graduation. You fail if you can't do simple math to change your life forever. Everyone should be required to learn BASIC life $h!t that would keep EVERYONE off welfare except truly disable people. Kids graduate today from 60K yearly colleges without even knowing BANK TELLERS are inside the bank behind that MACHINE out front (many haven't seen the inside of a BANK, or ever written a check, etc...LOL - no idea how to do anything NOT online). HUMANS are inside that "BANK" you idiots. There is more to it than the ATM machines...ROFLMAO. College is stupid for 95% of USA. They teach you WHAT to think which leads to SJW's in your basement for life parents! Instead you should teach HOW to think and SOLVE stuff, which leads to INCOME forever easily without 9-5 in many cases at some point. You are supposed to make INCOME from OTHER sources without work so you can QUIT working for someone else's dreams and make your own.
Students graduate today with barely a 2K work vocab, and maybe the best hit 4k (harvard vocab probably around 3-4k), while our founding fathers had vocabs of 50K+ words. College is stupid today people unless you're there for science, computers, or other HIGH tech learning. Painting, PE, etc...All totally wasted $$$. Do that on your own time, and NOT on our dime either. Grammar nazis go away, 7am and I don't care. It's about the data no my spelling etc...LOL.
Qasar - Friday, July 23, 2021 - linkholy crap, now that is one EPIC anti amd rant, as usual.
take this garbage to wccftech where you belong
Machinus - Friday, July 23, 2021 - linkspam is getting more annoying.
Intel is never getting process lead back.
webdoctors - Friday, July 23, 2021 - linkI don't know if you're sober TheJian, but I like your energy! I wish I still had this much passion in life...
mode_13h - Saturday, July 24, 2021 - linkUh, sounds to me like an old man ranting and raving, mostly about "the kids, these days!"
mode_13h - Friday, July 23, 2021 - linkI started reading this with some idea what to expect. No real surprises, at first. But then, I scrolled. And scrolled. And scrolled. Can this possibly be a record for Anandtech news comments??
So, let's see what we've got:
* Dump your AMD stock
* Pat should buy all of TSMC's 3nm
* we NEED MORE GPUS
* Business IS WAR, and WAR is hell.
* Lisa Su doesn't know how to win
* Consoles need to die
* Chasing the poor is stupid unless you have already soaked the rich completely.
* the poor can wait until next year or rearrange their budget
* Get a better job because AMD needs NET INCOME, so upgrade your life
* Intel ... shorted 10% of their own customers to make high MARGIN products
* killed netflix ages ago, too much SJW (...but watches Hallmark TV???)
* (money-saving tips on internet access & streaming services... for some tastes, I guess)
* GET SMARTER WITH YOUR MONEY! (but a new PC yearly is somehow not dumb?)
* (oops... I guess Hallmark is now SJW too?)
* (uh oh, I guess TheJian isn't down with "the gays")
* whew! movie making at BYU to the rescue!
* Don't complain about part prices when you are LIVING beyond your means
* ENJOY yearly Christmas gifts to yourself/family
* I just showed you some simple crap that WORKS for $1500 a year
* We could afford them already (so can I, but in no way can I justify $1500 for a GPU)
* Hopefully the whiners are done whining about pricing (I wouldn't bet on it)
* hopefully AMD reads this and kills consoles. (I wouldn't bet on it)
* Risk the suit. Shortage >> Contracts. Screw MS/Sony and reputation as a partner/supplier.
* AMD should've had perfect foresight. How dare they not recklessly leverage the company!
* You could be a millionaire simply (only if you don't waste money on annual PCs)
* People need to stop thinking SHORT TERM.
* You fail if you can't do simple math to change your life forever.
* HUMANS are inside that "BANK" you idiots. (huh? who doesn't know that?)
* College is stupid for 95% of USA.
* INCOME forever easily without 9-5 (though I did take that out of context)
* Students graduate today with barely a 2K work vocab; founding fathers had 50K+
* College is stupid today. Painting, PE, etc...All totally wasted $$$.
* Grammar nazis go away, 7am and I don't care. (clearly)
* It's about the data no my spelling etc...LOL. (time for a laugh break, indeed)
At least English majors know about grammar, punctuation, and how to write an essay that doesn't read like a drug-fueled rant. If you care about your message, then you should care about effectively communicating it.
But OMG, get over yourself, dude. You're not going to solve the industry, the market, and society's problems by posting a Wall Of Text (tm) in some news comments on a random tech website. More importantly, cut back on whatever you were taking when you wrote that. It doesn't make you sound as smart as you think it does.
GeoffreyA - Saturday, July 24, 2021 - link"Can this possibly be a record for Anandtech news comments"
It may well be! TheJian has done it again.
GeoffreyA - Saturday, July 24, 2021 - linkOn a sober note, I feel TheJian's material usually has an undercurrent of self-help/success/motivational/alpha/you can go to the top philosophy. Which is rampant these days.