Intel signals 2020 as a turnaround year

Intel Corp. on Thursday cemented the market view that the chip industry is turning around after a prolonged slowdown, forecasting better 2020 revenue and profit than Wall Street anticipated, driven by cloud computing demand.

The company’s sales in its closely watched data center business jumped 19 percent, helping it beat fourth quarter profit and revenue estimates and sending its shares up seven percent in extended trading.

Chief financial officer George Davis said in an interview that sales to cloud computing providers were up 48 percent year-over-year in the fourth quarter, a trend expected to continue this year.

The Santa Clara, California-based chipmaker expects fiscal year 2020 revenue of about $73.5 billion, more than $1 billion ahead of the Wall Street consensus, according to IBES data from Refinitiv.

Davis did not name specific customers, but so-called “hyperscale” cloud providers such as Amazon Web Services and Microsoft Corp. in the US and Alibaba Group Holding and Baidu Inc. all purchase Intel chips for data centers whose capacity they rent out to large businesses.

“What we’re seeing is very strong demand from cloud players,” Davis told Reuters. “I have to give credit to the hyperscalers for this quarter.”

Intel said its transition to a newer generation of chipmaking technology was progressing better than it expected and that it would boost its capacity to make chips for personal computers, in a sign that the manufacturing woes that plagued the chipmakers over the past year were starting to ease.