Samsung topples Intel in chips
Intel’s more than two decade-long reign as the king of the semiconductor ended Thursday when South Korea’s Samsung Electronics elbowed the Santa Clara manufacturer aside to become the leading maker of computer chips.
Samsung reported record-high quarterly profit and sales Thursday. Analysts say it nudged aside Intel in the April-June quarter as the leading maker of semiconductors, the siliconbased chips that are a staple of the 21st century wired world.
Samsung said its semiconductor business recorded $7.2 billion in operating income on revenue of $15.8 billion during the April-June period.
When Intel reported its quarterly earnings later in the day, it said that sales rose 9 percent to $14.8 billion — topping estimates, but not topping Samsung.
The company’s Data Center Group — which sells server chips, a business where Intel has almost 100 percent market share — posted sales of $4.4 billion in the second quarter, a gain of 9 percent. Revenue in the personal-computer processor division rose 12 percent even as the overall PC market shrank. The company also gave an upbeat forecast for third-quarter and annual revenue, sending the shares up in extended trading.
Though most of Intel’s sales come from PC chips, the more-lucrative server business has propelled profit and accounted for most of the company’s revenue growth since 2011. Under CEO Brian Krzanich, Intel has been branching out into new markets such as memory chips that could help make up for the PC market’s persistent decline.
“You have to take your hat off to Intel in terms of the ability to foster growth in a very flat space,” said Daniel Morgan, a fund manager at Synovus Trust Co., which owns Intel shares. “They are definitely bucking the trend.”
Intel’s second-quarter net income climbed to $2.8 billion, or 58 cents a share, from $1.3 billion, or 27 cents, in the same period a year earlier. Excluding certain items, profit was 72 cents a share. On that basis, analysts had projected 68 cents. Still, Samsung’s semiconductor division is widely expected to overtake Intel’s sales on an annual basis this year, analysts say.
For over a decade, Samsung and Intel each ruled the market in its own chip category.
Mobile devices are key to understanding Samsung’s ascent, even as its de facto chief is jailed, battling corruption charges, and it recovers from a fiasco over Galaxy Note 7 smartphones that had to be axed last year because they were prone to catch fire.
Intel, the chief supplier of brains for personal computers, has been the world’s largest semiconductor company by revenue since 1992, when it overtook Japan’s NEC.
Samsung leads in memory chips, which enable the world to store the data that fuels the digital economy.
“Greater use of smartphones and tablet PCs instead of computers is driving the rise of companies like Samsung,” said Chung Chang Won, a senior analyst at Nomura Securities.