Sales in the division responsible for server chips and other data-center gear rose 24%, notching important growth in the highly profitable segment. Intel is leaning on the unit, which typically makes up around one-third of its revenue, as sales of personal computers give way to mobile devices and smart speakers. Sales of data-center equipment to cloud providers grew 45% from a year earlier, while sales to network operators were up more than 30%. Enterprise sales edged up 3%, the company said. Executives on its conference call attributed that growth to corporate spending to keep proprietary data on-site rather than in the cloud.
This has become a booming market of late, driven in large part by the billions spent every year by tech giants such as Amazon.com That growth has fueled a business that has generated more than $21 billion in revenue for Intel over the past 12 months and helped offset flatlining sales of personal-computer chips. There is an opening for AMD because Intel has struggled to transition to a new chip-manufacturing process. One of the companies that makes AMD's chips, Taiwan Semiconductor Manufacturing, or TSMC, has moved ahead of Intel and is producing the latest version of AMD's Epyc server processor, which is expected to start shipping in volume next year. Intel doesn't intend to launch a server chip based on its newest production process until sometime in 2020.
In announcing a six-month delay on its transition to 7nm products, Intel is doing its best to keep things moving--tweaking 10nm processors into another ' ' iteration, pushing out 10nm desktop CPUs, and announcing delays for its first Xe GPUs for the datacenter, too. In order to keep products on schedule, Intel may even manufacture them using external foundries--shocking news for industry watchers well-acquainted with Intel's massive fab investment. Still, the shift could affect those chips' pricing, and it's uncertain whether Intel can deliver them on time. Intel dropped several bombshells on Thursday. First, it acknowledged that a design defect in its 7nm manufacturing process will delay the transition from the current 10nm process to 7nm by six months, or a full year past its original internal expectations.
Intel is looking for a successor to Brian Krzanich, who resigned last week for violating company policy by having a relationship with a co-worker, which The Wall Street Journal on Friday reported began before he became CEO. Intel under Mr. Krzanich's watch has repeatedly missed its schedule for shipping significant quantities of its next-generation chips. The effort has been mired in manufacturing troubles, with too few chips coming off production lines working properly, the company said in April. Taiwan Semiconductor Manufacturing Co. TSM 1.33%, which fabricates chips for Intel's chief rivals, is expected to ship new chips this year that technical and financial analysts say will bear tiny transistors of a size comparable to the next-generation chips Intel has delayed into 2019. Smaller transistors allow chip makers to pack circuitry more densely, making for more powerful chips that potentially are also smaller and use less electricity.