Shares of Intel Corp rose by 6 per cent after the chip maker posted better than anticipated results for the third quarter in terms of its profit and revenue. The growth was primarily driven by the data center business of the company that is has high margins and strong demand for its PC chips.
The gains were however subsequently lost by the company over concerns over U.S. trade tensions with China.
Following a string of disappointing results from some of the major tech companies that rocked the stock markets, investors were relieved by the results of the chip maker that posted 39 percent rise in profits and forecast better than expected results for the fourth quarter.
Tech shares were sent into a tizzy downslide following disappoint6ing results from Amazon Inc and Alphabet Inc.
The trade tensions between US and China or the Chinese economy do not pose any near-term weakness according to Intel executives. It has to be considered that some of the largest data centres in the world – which are the major consumers for Intel chips, such as Baidu Inc as well as the large consumer PC factories are situated in China. But most of the initial share market gains for Intel were lost after its Interim Chief Executive Bob Swan said that there was a possibility that trade tensions could become a long term “headwind” next year for teh company’s performance.
Warnings of a slowdown for the rest of the current year have been used by other chip manufacturers including Texas Instruments Inc, STMicroelectronics NV and SK Hynix.
However this did not apply to Intel which saw its performance grow driven by strong sales of chips for PCs. This is the second consecutive quarter that Intel has been able to harness the demand for chips from this segment following a long streak of stagnation in the sector. It also benefited from strong sale of iPhone modem chips.
Game manufacturing firms building high end machines and strong demands for computers from business customers helped drive the demand for PC chip, Swan told the media. it was earlier this year that Microsoft Corp announced its intention of ending support for some of the older versions of Windows by early 2020 which prompted many businesses to upgrade their PCs.
Initially, the results from Intel seemed to defy worries about a slowdown in the global chip business because of trade conflicts between the United States and China or a gradual slowdown of the Chinese economy.
“We’ll be working with our domestic Chinese customers and our global [PC manufacturers] to adjust and adapt the supply chain to deal with constraints,” Swan told the media before a conference call. However, during the call, Swan acknowledged that there can be some “headwinds” for Intel in 2019 because of the trade tensions without specifying the impact on sales.
(Adapted from Reuters.com)