Chipmaker Intel Corp cut its full-year revenue forecast on Thursday and missed analysts` estimates for first-quarter sales for its higher-margin data centre business, sending its shares down 7 percent after hours.
The lowered full-year revenue forecast adds to concerns that an industry-wide slowdown could persist until the end of 2019 and follows a similar warning earlier this week from chipmaker Texas Instruments.
Intel marginally beat Wall Street targets for revenue and profit in the first quarter, but sales in the data centre group unit fell 6.3 percent to $4.90 billion, hit by weakness in China and inventory correction. Analysts had expected revenue of $5.10 billion, according to financial and data analytics firm FactSet.
The company has turned to the server chips it supplies data centre operators for growth in recent years.
The chipmaker cut its 2019 revenue forecast to $69 billion, from the $71.5 billion it told investors to expect when it last reported earnings in January.
"Looking ahead, we`re taking a more cautious view of the year, although we expect market conditions to improve in the second half," said Chief Executive Officer Bob Swan.
A year-long trade war between China and the United States and weakening smartphone sales have taken a toll on the global semiconductor industry. Investors are banking on the launch of 5G telecom network and demand for chips used in self-driving vehicles to reignite growth.
The Santa Clara, California-based chipmaker also said it expects revenue and profit of $15.6 billion and 89 cents per share for its second quarter that ends in June, compared with analysts` expectation of $16.85 billion and $1.01 per share.
"A bad as the outlook is for 2Q19 and FY19 due to weaker macro softness, we think there remain further headwinds due to the increased competitive threat from AMD into 2H19 and 2020," said Kinngai Chan, an analyst with Summit Insights Group.
Net income fell to $3.97 billion, or 87 cents per share, in the first quarter, from $4.45 billion, or 93 cents, from a year earlier.
Excluding items, the company earned 89 cents per share, beating analysts` estimate of 87 cents.
Revenue in Intel`s client computing business, which caters to PC makers and still the biggest contributor to sales, rose 4.45 percent to $8.59 billion, beating FactSet estimates of $8.38 billion.
Shares were trading at $53.33 in trading after the bell.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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