Intel to Start Production of Haswell Chips in Q4, Despite Slow Demand

Intel Reduces Wafer Starts to Cut Costs in Q4 2012

by Anton Shilov
10/16/2012 | 09:26 PM

Intel Corp. on Tuesday reported its financial results for the third quarter of the year. Even though the company retained profitability, its sales were down 5% year-over-year and the outlook for the ongoing quarter the company provided points to continued issues with demand for personal computers. Nonetheless, the company is on track to start production of next-generation Haswell microprocessors in Q4 2012.

 

"Our third-quarter results reflected a continuing tough economic environment. The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in ultrabooks and phones and excited about the range of Intel-based tablets coming to market," said Paul Otellini, president and CEO of Intel.

Intel reported third quarter revenue of $13.5 billion (down 5% year-over-year), operating income of $3.8 billion (down 20% compared to the year ago quarter), net income of $3.0 billion (14% lower than a year ago) and EPS of $0.58 (down 11% year-over-year). For the fourth quarter of 2012, the world's largest chipmaker expects revenue of $13.6 billion ± $500 million and gross margins of around 57%~58%.

To respond to a weaker than expected demand environment, Intel has taken several actions. In particular, the chipmaker substantially cut wafer starts at its factories in late Q3 2012 and intends to maintain lower factory utilization rates throughout the fourth quarter. Intel projects these factory adjustments to help bring down its total inventory levels by approximately $500 million. At the same time, Intel stressed that despite of lower demand for PCs, it will start initial volume manufacturing of its next-generation Haswell central processing units this quarter, which will cause an uptick of inventory levels.

"We expect an increase in inventory reserves as we start production on our next-generation micro architecture product code-named Haswell, which we expect to qualify for sale in the first quarter of 2013," said Stacy Smith, chief financial officer of Intel.

At present Intel still does not specifically reveal when does the Haswell chips and products on their base are scheduled to hit the market. The company only claims that the first Haswell-based systems will be available in the first half of the year.