Intel is gearing up to spend more than $16 billion on various investments during 2011, a $500 million jump over what executives previously projected, with the money going to everything from its efforts to expand deeper into the mobile device space to getting its manufacturing plants ready for upcoming generations of processors.
Intel executives touched on some of these efforts during a conference call with journalists and analysts July 20 as they announced a fifth consecutive quarter of record financial numbers. The world's largest chip maker saw revenue of $13.1 billion, up 22 percent over the same period last year. At the same time, net income came in at $3.2 billion, a 10 percent increase over the second quarter of 2010.
The company was buoyed by strong sales of chips with its new Sandy Core architecture, which executives said saw the fastest ramp of any product in the company's history. This year, two-thirds of the chips Intel sells will be based on Sandy Bridge, they said.
Intel saw strength in its Data Center Group, which garnered 15 percent revenue growth, and its Embedded & Communications Group, which had revenue growth of 25 percent. The PC Client Group also saw revenues grow, up 11 percent from the same three months last year.
However, executives also lowered its forecast for PC sales in 2011 to 8 to 10 percent, down from the earlier prediction of growth in low double digits. CEO Paul Otellini said there is softness in the mature markets, such as the United States and Europe, and that while businesses continue to buy PCs, the consumer space is still weak.
"The mature market consumer segment is still soft, but the emerging-market consumer segment is healthy and growing," Otellini said during the call.
For example, Brazil is poised to become the third largest PC buyer in the world. Some emerging markets saw revenue growth as high as 70 percent.
Intel also saw revenue declines in its low-power Atom platform, with revenue of $352 million, a drop of 15 percent. The Atom business illustrated Intel's struggle to gain headway in the booming smartphone and tablet markets, which are dominated by chips designed by ARM Holdings and made by the likes of Qualcomm, Texas Instruments and Nvidia.