U.S. semiconductor corporations Intel, boosted by rising demand for artificial intelligence (AI) data centers, posted second-quarter revenue of $16.1 billion (about 23.77 trillion won) and operating income of about $1.79 billion (about 2.64 trillion won) this year. Revenue rose 25% from a year earlier, and operating income swung to a profit.
Intel announced its second-quarter results with these figures on the 23rd (local time). The U.S. generally accepted accounting principles (GAAP) operating margin was 11.1%, an improvement of 35.8 percentage points from -24.7% a year earlier. In the second quarter of last year, it posted an operating loss of about $3.19 billion (about 4.7 trillion won).
Second-quarter revenue beat the market forecast of $14.42 billion (about 21.29 trillion won) compiled by London Stock Exchange Group (LSEG). The year-over-year revenue growth rate was the highest in about 15 years since the third quarter of 2011.
The gross margin came in at 40.4%, up 12.9 percentage points from the same period last year. On a non-GAAP basis, the gross margin was 41.8% and the operating margin was 17.2%. However, on a GAAP basis, net loss attributable to Intel was tallied at $11.0 billion (about 16.24 trillion won). On a non-GAAP basis, it recorded net income of $2.2 billion (about 3.25 trillion won). Cash generated from operating activities was $7.0 billion (about 10.33 trillion won).
By business, growth in the data center and AI institutional sector was the steepest. Revenue in this institutional sector was $6.3 billion (about 9.3 trillion won), up 59% from a year earlier. As AI infrastructure investment increased, demand expanded for central processing units (CPUs) for data centers.
Revenue for the Client Computing and Physical AI Group (CCPG), which handles personal computers (PCs) and products for Edge AI and robots, was $8.9 billion (about 13.14 trillion won), up 13%. Total revenue for Intel's product institutional sector was $15.1 billion (about 22.29 trillion won), up 28%.
Intel's foundry institutional sector recorded revenue of $5.8 billion (about 8.56 trillion won), up 31% from a year earlier. Intel said the 1.8-nanometer (nm) class process "Intel 18A-P" has entered risk production, a pre-mass-production verification stage. Some next-generation Panther Lake PC processors applying the 18A process are in mass production using ASML's High Numerical Aperture extreme ultraviolet (High NA EUV) equipment.
Chief Executive Officer (CEO) Gelsinger of Intel said, "AI is creating unprecedented compute demand," and added, "Intel is positioned to secure sustainable growth across CPUs, application-specific integrated circuits (ASICs), advanced packaging, and an extensive foundry network." He continued, "The second-quarter results reflect strengthened execution speed, accountability, and a customer-centric approach, delivering the highest sales growth rate in about 15 years."
Intel forecast third-quarter revenue at $15.8 billion to $16.8 billion (about 23.33 trillion to 24.8 trillion won). Even the lower end of the outlook exceeds the market estimate of $15.1 billion (about 22.29 trillion won. Under GAAP, it guided a 41% gross margin and 42% on a non-GAAP basis. Chief Financial Officer (CFO) Dave Zinsner of Intel said, "Buoyed by solid demand and improvements in factory Production yield and production cycles, we exceeded the company's performance outlook," adding, "We are significantly increasing investments in equipment, cleanroom space, and substrates to support growth in products and the foundry business this year and next."
In September last year, Intel sold a 51% equity stake in programmable semiconductor corporations Altera and excluded Altera from consolidation. Accordingly, the comparison of this year's second-quarter results with the same period last year reflects the effect of excluding Altera from consolidation.