Intel sees lower quarterly profit on weaker global chip demand

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FILE PHOTO: U.S. chipmaker Intel Corp’s logo is seen on their “smart building” in Petah Tikva, near Tel Aviv, Israel December 15, 2019. Picture taken December 15, 2019. REUTERS/Amir Cohen

(Reuters) – Intel Corp (INTC.O) forecast current-quarter profit below analysts’ estimates on Thursday as the semiconductor industry deals with slack demand due to massive shutdowns from the coronavirus outbreak, sending the chipmaker’s shares down 6% in extended trading.

The company said it would not update its full-year forecast as it normally does each quarter given ‘significant economic uncertainty’.

The COVID-19 pandemic has ripped through the semiconductor industry, already grappling with slowing sales of smartphones and PCs, and has hurt demand from customers, especially in the automotive sector, which many chipmakers had hoped would be a driver for growth in the coming years.

Intel’s tepid forecast also weighed on shares of other chipmakers. Nvidia Corp (NVDA.O), Micron Technology (MU.O), Applied Materials (AMAT.O), and Advanced Micro Devices (AMD.O) fell between 1% and 2% after market.

Intel expects second-quarter adjusted profit of $1.10 per share, compared to analysts’ average estimate of $1.19 per share, according to IBES data from Refinitiv. (bit.ly/3aC0Rix)

Revenue in the company’s client computing business, which caters to PC makers and is the biggest contributor to sales, rose 14% to $9.8 billion during the first quarter, beating FactSet estimates of $9.34 billion.

Intel’s higher-margin data center business reported revenue that surged 43% to $7 billion, while analysts on average had expected revenue of $6.32 billion, according to FactSet.

Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Shounak Dasgupta

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