(Reuters) – Intel Corp (INTC.O) on Thursday cemented the market view that a prolonged slowdown in the chip industry was bottoming out by forecasting full-year revenue and profit above analysts’ estimates.
The company’s sales in its closely watched data center business jumped 19%, helping it beat fourth-quarter profit and revenue estimates and sending its shares up 7% in extended trading.
Intel said its transition to a newer generation of chipmaking technology was progressing better than it expected and that it would boost its capacity to make chips for personal computers, in a sign that the manufacturing woes that plagued the chipmakers over the past year were starting to ease.
Intel’s positive outlook follows an equally upbeat forecast from chipmaker Texas Instruments (TXN.O) on Wednesday. Analysts view 2020 as a recovery year for semiconductors, driven by 5G spending for both smartphones and network upgrades.
After years of acquisitions outside its core area of processing chips under previous leaders, Intel Chief Executive Bob Swan has set a goal of becoming more disciplined about spending, slowing investments in areas like memory chips and shedding struggling businesses.
Intel has doubled down on its core markets such as personal computers and data centers, both of which beat analysts’ fourth-quarter expectations.
The Santa Clara, California-based chipmaker expects fiscal year 2020 revenue of about $73.5 billion, compared with analysts’ average estimate of $72.25 billion, according to IBES data from Refinitiv.
Revenue from Intel’s client computing business, which caters to PC makers and is still the biggest contributor to sales, rose 2% to $10 billion in the fourth quarter, beating FactSet estimates of $9.74 billion.
Net revenue rose 8.3% to $20.21 billion, beating estimate of $19.23 billion, according to IBES data from Refinitiv.
Excluding items, the company earned $1.52 per share, above estimates of $1.25.
Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Maju Samuel