Intel Reports Tepid Progress on 10 nm

Intel said that it’s making progress on improving 10-nm yields and reiterated its pledge to have 10-nm chips shipping by the 2019 holiday season.

In a conference call with analysts following a financial report that beat analysts’ expectations for the 12th straight quarter, Venkata (Murthy) Renduchintala, president of Intel’s Technology, Systems Architecture and Client Group, said that 10-nm yields are now tracking roughly in line with what the company experienced at the 14-nm node when it prepared to make that transition.

“We’re still very much reinforcing and reaffirming our previous guidance that we believe that we’ll have 10 nm shipping by holiday of 2019,” said Renduchintala. “And if anything, I feel more confident about that at this call than I did on the call a quarter ago. So we’re making good progress, and I think we’re making the quarter-on-quarter progress that’s consistent with prior generations having reset the progress curve.”

Intel has been dogged by yield issues at the 10-nm node, causing the company in April to delay the launch of 10-nm products until next year.

The 10-nm progress report came on the heels of a strong third-quarter report by Intel, which beat Wall Street’s estimates for sales and profit again, largely on the strength of a record quarter for its data center business segment.

Intel reported sales of $19.2 billion, up 19% from the third quarter of 2017. The company reported a net income for the quarter of $6.4 billion, up 42% from the third quarter of 2017.

Intel said that third-quarter sales increased across each of its business segments. The company’s sales to PCs increased 16% to reach $10.2 billion, while its “data-centric” revenue — from non-PC sales — increased 22% to reach nearly $7.1 billion.

The data center business is growing at nearly twice the rate that Intel expected when the year began. Its Data Center Group sales grew 26% for the quarter to top $6 billion for the first time, reaching $6.1 billion. Intel said that the strong sales were driven by demand from cloud and communications service providers.

Bob Swann, Intel’s interim CEO, said that the company was excited about data center products that it is ramping for 2019 but that 2018 has been “an outstanding year” for the Data Center Group. “Our DCG growth this year is projected to be north of 20%, real strong through the first three quarters of the year,” said Swann. “The fourth quarter, we expect really solid demand.”

Overall, Intel said that it expects sales to be about $19 billion in the fourth quarter, up 11% from the fourth quarter of 2017.

Intel again raised its estimate for 2018, saying that it now expects sales of $71.2 billion. It would mark the third straight year of record sales for the largest U.S. chipmaker.