Intel’s Revenue from Enterprise & Government Drops by 47% in Q3, Stock Down by 26% YTD

PC chipmaker Intel’s earnings during Q3 2020 reflected the tumultuous conditions of the world economy and increasing competition. According to the research data analyzed and gathered by Comprar Acciones, the company saw a revenue drop of 4% year-over-year (YoY) to $18.3 billion in Q3 2020. In contrast, in Q2 2020, its revenue had shot up an impressive 20%.

Intel’s data-centric business, which includes the Data Center Group (DCG), Internet of Things (IOTG), non-volatile memory solutions business (NSG), Mobileye (MBLY) and programmable solutions business (PSG), posted a relatively high drop of 10%. To some extent, its data-centric businesses drove the company’s overall weak performance.

DCG raked in $5.91 billion, a drop of 7% YoY, and lower than the FactSet estimate of $6.21 billion. Under the DCG segment, cloud revenue was among the few great performers, with revenue shooting up by 15% YoY. The reason behind this increase was the continued demand caused by the school- and work-from-home trends.

However, DCG’s Enterprise & Government segment declined by 47% YoY. Notably, it had previously enjoyed two quarters of remarkable growth above 30%.

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On the other hand, Intel’s PC-centric business (CCG) which sells PC chips increased by 1%, generating $9.85 billion in revenue. It exceeded the expectations of analysts polled by FactSet, who estimated $9.09 billion.

CCG’s performance was once again based on sustained growth in the notebook segment in support of remote work and learning.

Intel’s operating income declined by 22% YoY from $6.4 billion to $5.1 billion, while net income dropped by 29% YoY from $6.0 billion to $4.3 billion. Earnings per share (EPS) sank by 25% YoY from $1.35 to $1.02 during the third quarter.

Intel Market Share Drops by 3.3% as AMD Gains a Similar Percentage

In addition to the effects of the global pandemic, Intel’s decline is attributed to a number of other factors. In June, Apple announced that it would gradually replace Intel chips in its Macs with in-house chips designed during the coming year.

Even though Intel’s processor sales to Apple account for less than 5% of all sales, it would still have an effect.

Moreover, in July 2020 Intel announced that its new generation of 7-nanometer chips would be delayed until 2022. As a result of the delay, there was a possibility of outsourcing part of its manufacturing process. This could present an opportunity for Samsung and TSMC as they are among the most advanced foundries. Both companies have developed manufacturing capabilities for 5nm chips.

According to TrendForce, TSMC led the global semi-conductor foundry market share in Q2 2020 with a 53.9% market share. Samsung held a 17.4% market share during the same period.

Rival AMD already rolled out its 7nm chips, the Ryzen 4000. According to Mercury Research, Ryzen CPUs enabled AMD in Q2 2020 to win back the highest market share it has had since Q4 2013. Its overall x86 CPU market share was 18.3% in Q2 2020.

Desktop CPU market share was 19.2% while AMD mobility CPU market share hit an all-time high of 19.9%.

According to PassMark’s figures, Intel’s x86 CPU market share was 62.6% compared to AMD’s 37.3% in Q3 2020.

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Since the start of 2020, Intel has lost overall market share to AMD every month except March. According to data from the Steam Hardware and Software Survey, in May, Intel held a 77.54% market share, dropping to 76.84% in June. It dropped further to 76.27% in July, 75.09% in August and 74.24% in September.

In contrast, AMD’s share rose from 22.45% in May to 23.16% in June, 23.73% in July, 24.91% in August and 25.75% in September. The growth recorded by AMD between May 2020 and September 2020 is 3.3%.

Interestingly, Intel’s share during the period declined by around the same percentage.

AMD Revenue Soars by 56% YoY in Q3 2020; Net Income Skyrockets by 225% YoY

Intel stock is down by 26.02% (year-to-date) YTD as of November 2, 2020 and dropped by 21.72% over the trailing one-year period according to Marketwatch. On the other hand, rival AMD is up by 66.59% YTD and 125.17% in the trailing one-year period.

According to AMD’s Q3 2020 financial results, the company enjoyed robust growth during the period. It attributed the growth to strong demand for gaming, PC and data center products.

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AMD revenue during Q3 2020 was $2.8 billion, up by 56% YoY and 45% quarter-over-quarter (QoQ). Gross profit reached $1.2 billion, an increase of 58% YoY and 45% QoQ. Net income soared by 225% YoY to $390 million while earnings per share increased by 191% YoY to $0.32.

From $120 million in Q3 2019, net income more than tripled YoY and more than doubled QoQ from $157 million.

AMD’s revenue from the Computing and Graphics segment shot up by 31% YoY to $1.67 billion. According to the report, the increase was driven by a significant rise in Ryzen processor sales. The Enterprise, Embedded and Semi-Custom segment reported revenue growth of 116% YoY to $1.13 billion.