01—Abstract
Summary
Summary of the 10-Q filed October 22, 2021. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported a solid third quarter for fiscal year 2021, with total revenue reaching $19.2 billiona, a 4.7% increase year-over-year.
This growth was primarily driven by a strong performance in the Data Center Group (DCG), which saw a 10%b revenue increase, benefiting from increased platform volume and average selling prices (ASPs) due to a recovery in enterprise and government sectors. The Internet of Things Group (IOTG) and Mobileye also demonstrated significant growth, attributed to higher demand amid the economic recovery. Despite the overall revenue increase, the Client Computing Group (CCG) experienced a 2% decline in revenue, largely impacted by industry-wide component shortages affecting notebook volumes, and a slowdown in adjacent revenue due to the wind-down of its 5G smartphone modem business.
However, higher platform ASPs in CCG and increased desktop volume provided some offset. Intel also highlighted strategic advancements, including progress on its manufacturing process technology roadmaps and architectural innovations for future product generations. The company is navigating supply chain challenges while investing in future growth initiatives.
02—Key points
Key Highlights
- Total revenue for Q3 2021 was $19.2 billion, up 4.7% year-over-year, driven by strong performance in DCG and IOTG.
- Data Center Group (DCG) revenue increased by 10% year-over-year, reflecting a recovery in enterprise and government markets.
- Client Computing Group (CCG) revenue declined by 2%, primarily due to industry-wide component shortages impacting notebook volumes.
- The company provided updates on its advanced manufacturing process and packaging technology roadmaps, including new node names like Intel 4 and Intel 7, and discussed future technologies.
- Intel detailed architectural innovations at its Architecture Day 2021, showcasing next-generation CPU architectures and upcoming graphics products.
- Intel Foundry Services will lead a U.S. Department of Defense program for domestic commercial foundry infrastructure.
- Significant investments are being made in manufacturing capacity and R&D, with anticipated gross margins in the 51-53% range for the next two to three years before improvement.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Intel Corp kept $0.36.
- Revenue$19.19B100.0%
- Cost of revenue−$8.45B44.0%
- Gross profit$10.75B56.0%
- Operating costs−$5.52B28.8%
- Operating income$5.23B27.2%
- Interest, other & tax$1.60B8.3%
- Net income$6.82B35.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed October 22, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $19.19B$18.33B | +4.7% |
| Cost of Revenue | $8.45B$8.59B | −1.7% |
| Gross Profit | $10.75B$9.74B | +10.3% |
| R&D Expenses | $3.80B$3.27B | +16.2% |
| SG&A Expenses | $1.67B$1.44B | +16.7% |
| Operating Expenses | $5.52B$4.68B | +17.9% |
| Operating Income | $5.23B$5.06B | +3.3% |
| Interest Expense | $144.00M$160.00M | −10.0% |
| Net Income | $6.82B$4.28B | +59.6% |
| EPS (Basic) | $1.68$1.02 | +64.7% |
| EPS (Diluted) | $1.67$1.02 | +63.7% |
| Shares Outstanding (Basic) | 4.06B4.19B | −3.0% |
| Shares Outstanding (Diluted) | 4.09B4.21B | −3.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of Intel's revenue growth in Q3 2021?
Intel's revenue growth in Q3 2021 was primarily driven by a 10% increase in the Data Center Group (DCG) revenue, fueled by higher platform volume and ASPs due to a recovery in enterprise and government sectors. The Internet of Things Group (IOTG) and Mobileye also contributed positively with increased demand amid economic recovery.
What challenges did Intel face during the quarter?
Intel faced challenges primarily from industry-wide component and substrate shortages, which impacted notebook volumes in the Client Computing Group (CCG). Additionally, adjacent revenue in CCG declined due to the ramp-down of its 5G smartphone modem business. Demand in the cloud service provider market segment also saw a decrease compared to a strong Q3 2020.
What strategic initiatives did Intel highlight in this filing?
Intel highlighted significant progress on its manufacturing process technology roadmaps, introducing new node naming conventions and discussing future technologies. They also detailed architectural innovations aimed at future product generations and announced Intel Foundry Services' role in a U.S. Department of Defense program to bolster domestic foundry capabilities. The company reiterated its commitment to its IDM 2.0 strategy, involving increased investment in manufacturing and R&D.
How is Intel managing its NAND memory business divestiture?
Intel is progressing with the divestiture of its NAND memory business to SK hynix, with the transaction expected to occur over two closings. The carrying amount of NAND assets held for sale was $6.4 billion as of September 25, 2021, and the company continues to operate under the agreement until the closings, which are subject to regulatory approvals.
06—Continue