As we know, Intel the once king of silicon valley is currently undergoing a tremendous loss, and the major reasons for intel’s slow performance are directly related to the ongoing chip shortage as well as strong competition from its rival Advanced Micro Devices (AMD).
As a result, Intel is soon expected to release its post weak earnings. As we know intel is pushing its acquisition of various chip manufacturing firms as well as that Intel is increasing its portfolio of experienced engineers. The company also posted earnings of $17.8 billion for its second quarter or the quarter which ended in June.
Analysts at The Wall Street Journal believe that Intel will be able to meet its guidance and will post a net income of $4.2 billion which will mark a roughly $1 billion year-over-year drop. There is also a hint at a potential drop in profit for the company and The Wall Street Journal that the company has recently experienced a drop in its data center sales during the second quarter.
Citigroup’s analyst Christopher Danely believes that tough competition from AMD will result in Intel posting weak outlooks and also that most of the market lost by Intel has been occupied by AMD.
Citi analyst Christopher Danely expects Intel (INTC) to report a “weak” Q2 and Q3 outlook due to pushouts from the PC food chain and margin pressure/share loss in its CPU business. “Negative catalysts” such as pushouts from the PC end market and lower margins due to sharing loss to AMD (AMD) will lower consensus estimates and offset Intel’s “attractive valuation,” Danely tells investors in a research note. The analyst believes Intel’s gross margins could dip into the ’40s due to sharing loss to AMD and a correction in PC demand. He keeps a Neutral rating on the stock with a $60 price target.
The biggest disadvantage which Intel is facing against its rival AMD is the company’s inability to produce processors manufactured by leading-edge manufacturing technologies. AMD on the other hand has a clear advantage over Intel due to its products from the Taiwan Semiconductor Manufacturing Company (TSMC). TSMC’s latest process for personal computing products is its 7nm node, however, TSMC’s technologically is believed to be inferior to the similarly dubbed 7nm node from Intel.
However, the fact that Intel is yet to commence mass production of its 7nm processors speaks volumes as to why Intel is not producing any fruitful results despite having a technological advantage.