Intel is prioritizing its data center business amid ongoing supply shortages, even as the company reports strong third-quarter results. The tech giant’s quarterly earnings reflected a shift in strategy that focuses on operational efficiency and core business functions. For the quarter ending September 30, Intel posted a net income of $4.1 billion, significantly improving from a net loss of $16.6 billion the previous year, driven by revenues of $13.7 billion—higher than the expected $13.15 billion.
Despite this success, Intel’s supply constraints, particularly related to its semiconductor manufacturing processes, have hindered its ability to meet the growing demand from both client and data center markets. Intel’s CEO, Lip-Bu Tan, emphasized that their strategy will capitalize on increasing demand for compute driven by advancements in AI, deploying resources toward x86 platforms and purpose-built ASICs.
The Client Computing Group (CCG)—Intel’s largest division—generated $8.5 billion in revenue during the quarter, a 5% year-over-year increase, while its Data Center and AI (DCAI) revenue slightly declined by 1% to $4.1 billion. As part of its restructuring efforts, Intel eliminated its Network and Edge Group (NEX), merging it into CCG and DCAI to streamline operations.
CFO David Zinsner highlighted that while processor demand is strong, production capacity has yet to catch up with this increasing demand. He noted, "Capacity constraints,” particularly with earlier generation processes, are limiting their output. Intel is focusing on adjusting pricing and shifting production toward products that are in stock to manage these limitations effectively.
Looking forward, Zinsner anticipates stable revenue through the fourth quarter but expects CCG revenue to decline modestly as they prioritize data center shipments, particularly for AI applications, over entry-level client parts.
