(Reuters) – Intel Corp <INTC.O> on Thursday missed revenue estimates for its data-center business for the third quarter as the COVID-19 pandemic pushed its government and business customers to spend less on its chips, sending its shares down 8%.
Revenue from Intel’s data-center business fell 7% to $5.9 billion in the reported quarter, while analysts on average had expected revenue of $6.21 billion, according to FactSet.
Intel is the dominant provider of processor chips for PCs and data centers, but the company has struggled with manufacturing delays, saying in July that its next generation of chipmaking technology has slipped six months behind schedule.
Rivals such as Advanced Micro Devices Inc <AMD.O> and Nvidia Corp <NVDA.O>, which use outside manufacturers, have capitalized on Intel’s woes and are gaining market share in both data centers and PCs, with AMD hitting its highest market share since 2013 earlier this year.
Intel, however, said a 10-nanometer chip factory in Arizona had reached full production capacity and that it now expects to ship 30% higher 10nm product volumes in 2020 compared to January expectations.
The company said spending by government and business customers on its data-center chips plummeted 47% after two quarters of growth.
Excluding items, it earned $1.11 per share, in line with estimates, according to IBES data from Refinitiv.
The company said it was expecting fourth-quarter revenue of about $17.4 billion, while analysts were expecting revenue of $17.36 billion.
Earlier this week, Intel said it would sell a money-losing commodity memory chip business to Korea’s SK Hynix <000660.KS> in a $9 billion all cash deal, with Intel hanging on to a more advanced memory chip unit and using the cash to invest in other products.
(Reporting by Munsif Vengattil, Ayanti Bera and Stephen Nellis; Editing by Anil D’Silva)
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