Intel's Q3 guidance disappoints, shares slip

Semiconductor giant Intel posted better-than-expected quarterly profits overnight, but guidance for the following quarter fell short of forecasts.

Some market watchers also voiced skepticism about the company's ability to regain market share in the especially lucrative segment for server processors.

For the second quarter, Intel posted a 2.0% rise in sales to $18.5bn (consensus: $17.8bn) for net income, excluding one-offs, of $5.2bn and earnings per share of $1.28 (consensus: $1.07).

Critically, Intel had fallen behind in technology relative to rivals TSMC and Samsung which over time would see it lose market share.

Intel was also increasingly having to compete with the likes of AMD and even Amazon and Google with the latter two having embarked on manufacturing their own server chips.

In response, Intel boss, Pat Gelsinger, had pledged to regain technology leadership and to set up a new unit that would allow customers - and even rivals - to produce their own chip designs using its factories.

Nevertheless, in a conference call with analysts, Gelsinger was evasive when queried about the company's reported interest in aquiring chip-maker Global Foudnries.

"At this point, we would not say that M&A is critical, but nor would we rule it out. Our view is that industry consolidation is very likely."

For the three months to September, Intel projected sales of approximately $18.2bn (consensus: $18.3bn) with earnings per share seen at $1.10.

Some observers saw a continued loss of market share in server chips as implicit in those forecasts.

The company was also anticipating adjusted gross margins of 55.0%, which was below analysts forecasts.

As of 1046 BST, shares of Intel were trading down by 1.80% to $54.95.