Chipzilla expects a ‘big boost’ for its new AI chips this year after the sales pipeline for such products grew by more than £1.5 billion.
But that’s not real money; it’s potential customers who might buy Intel’s accelerator chips, like the Gaudi 2 or the Max GPUs, instead of Nvidia’s data centre GPUs, which rule the market.
Intel’s boss Pat [kicking] Gelsinger told an earnings call that revenue for the last quarter went up 14 per cent to £11.4 billion.
That’s the first time in ages that Intel saw any growth, but it wasn’t enough to make up for the losses it suffered for most of 2023. The full-year revenue was £40 billion, which is a 14 per cent drop from 2022.
Intel made more money in the last quarter mainly because of solid PC chip sales, but that’s not the whole story. The company needs help implementing its ‘AI everywhere’ plan, which covers everything from PCs to servers.
Intel’s PC chip business, the Client Computing Group, saw revenue go up 33 per cent to £6.5 billion as the company shipped its first Core Ultra processors for the new AI PCs, where it faces tough competition from AMD, Apple and soon Qualcomm.
‘We expect to ship about 40 million AI PCs in 2024 alone, with more than 230 designs from thin PCs to handheld gaming devices,’ Gelsinger said.
He said the Client Computing Group’s revenue grew by double digits for the third quarter. He added that that meant an average level of stock among Intel’s OEM and channel partners and ‘strong gaming and commercial’ PCs.
Another critical area where Intel hopes to make a significant impact in AI is its Data Centre and AI Group. Still, the business did severely in the last quarter, with revenue going down 10% to £3 billion.
The company blamed ‘ongoing competition’ and a smaller market for data centre GPUs as two big reasons why Intel failed in this area.
Analyst Patrick Moorhead said in the US that the hype around AI computing in the data centre held back Intel’s server sales in many ways: cloud service providers replacing GPUs rather than whole systems, new servers not shipping because of GPU shortages, and businesses stopping purchases to figure out their AI plan.
Gelsinger pointed out that Intel’s Data Centre and AI Group revenue was higher than the previous quarter, and the business is ready to bounce back thanks to its upcoming Sierra Rapids and Granite Rapids CPUs and its small but growing AI chip efforts.
‘We are building momentum and positioning ourselves well to win back share in the data centre,’ he said.
While Gelsinger sees some hope from Intel’s AI chips, he said the company’s latest Xeon processors would help it win a share in the growing AI inference market, where applications use deep learning models trained on loads of data to make guesses.
‘We think that the market moves more from high-end training to inference, where our products are better for it,’ he said, adding that he expects businesses to use on-site servers for inference purposes.
While Intel’s Network and Edge Group reported that last-quarter revenue fell 24 per cent to £1.4 billion, Gelsinger said the business will also play a significant role in AI workloads, especially regarding inference at the edge.
‘The message of 2024 is going to be inference AI everywhere. That’s going to be at the edge. That’s going to be the AI PC, and it’s going to be in the enterprise data centre. All areas that Intel has a stronger presence,’ he said.
The company expects first-quarter revenue to be between £9 billion and £9.7 billion, which, at the high end, would be a 13 per cent increase from last year.
According to Gelsinger, its first-quarter guidance is based on the expectation that ‘client, server, and edge’ chips will ‘perform well’.
At the same time, Intel sees ‘discrete headwinds’ from its Mobileye car business, the Programmable Solutions Group, which became a separate business earlier this year, and several business exits.
According to Yahoo Finance, that forecast was below the expectations of Wall Street analysts, who hoped for nearly £10.5 billion in revenue for the first quarter.
‘Importantly, we see this as temporary and expect growth in revenue and [earnings per share] for each quarter of 2024,’ Gelsinger said.
