July 23 (Reuters) – Two major chipmakers this week gave very different views on whether growing semiconductor demand will begin to ease in the second half of the year, and it will take maybe another round of profits next week to sort it out.
Texas Instruments (TXN.O) on Wednesday gave a third-quarter sales forecast that was essentially flat, with company executives declining to say what the last quarter of the year might look like, a hint that orders could to slow down. Read more
In contrast, Intel Corp (INTC.O) raised its forecast for the full year on Thursday, with chief executive Pat Gelsinger saying it could take two years for the chip industry to catch up with “explosive demand.” and predicting that a boom in PC sales would be driven by the pandemic, work-from-home arrangements would continue into the next year. Read more
Analysts, however, saw Intel’s uptick in outlook as being driven by a strong, already completed second quarter, and said it pointed to a weaker final quarter of 2021. Investors agreed, causing the company’s shares to fall as much as 6.3% by 1:30 p.m. EST on Friday.
Summit Insights Group analyst Kinngai Chan just didn’t believe Intel’s predictions that the PC market would continue to grow until next year.
âWe don’t agree with Intel’s view that the PC (total addressable market) will grow year over year in 2022,â Chan said. “We’ve already seen inventory build up for Chromebooks and gaming desktops, and we believe supply will catch up with demand by the start of 4Q21 for laptops as well.”
Analyst Chris Caso at Raymond James said there could also be longer-term issues in Intel’s data center business, where he expects growth this quarter despite rival Advanced Micro Devices Inc (AMD) (AMD.O) has a faster chip on the market.
“We agree that capacity constraints at AMD are likely to verify further significant market share gains in the near term – but it is only a matter of time before AMD has access to more capacity. , AMD’s production run next year will be a catalyst, and Intel’s Sapphire Rapids (data center processor chip) lag is not helping, âCaso wrote in a note.
PRESS TO LAST
Still, Intel’s raised forecast is consistent with the bullish outlook for its biggest foundry rival Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW), which expects strong sales growth in the current quarter, driven by strong demand for smartphones, high performance PCs and cars. Read more
Auto industry executives also continue to suggest that the squeeze in semiconductor supply, also spurred by a boom in car sales this year, will continue until next year. Read more
Other economists and industry leaders agree and say that even if the shortage of automakers diminishes, other manufacturers will suffer. Read more
For now, investors will likely have to wait until next week for clarity, with AMD, Qualcomm Inc (QCOM.O), Samsung Electronics (005930.KS) and SK Hynix (000660.KS) releasing all of their results.
Combined with Intel’s, AMD’s results should give a full picture of the PC and data center markets when the company updates its outlook for the full year.
Qualcomm traditionally only forecasts a quarter in advance, but the company’s dominance in mobile phones means investors often read its guidance for the third quarter as a proxy for smartphone launches in the fall, including closely watched Apple Inc iPhone (AAPL.O).
Reporting by Stephen Nellis in San Francisco and Chavi Metha in Bengaluru Editing by Patrick Graham, Saumyadeb Chakrabarty and Mark Potter
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