Intel says it has lost momentum this year

OAKLAND, Calif - Microprocessor giant Intel Corp has stumbled badly at a time when smaller rival AMD and others are picking up speed. It says it will regain its balance this year.

The revenue outlook was behind Wall Street estimates by about $3 billion, which shocked the market on Thursday. The weakness of the global economy makes Intel's challenges more difficult.

Intel is still the three hundred pound gorilla in the market of microprocessors, called central processing units CPUs, the brains of computers, and it says it has passed through the worst of a revamp under a new chief executive.

We stumbled, right? We lost momentum because we lost share. Pat Gelsinger, Chief Executive, told investors on a conference call that they think the year will be a good year.

Intel still dominates the markets for PC and server processors, with a market share of more than 70%, according to tech research firm IDC. In 2017 that is down from more than 90% in those markets.

Someone going from 1% to 13% is significant. IDC analyst Shane Rau said that there is a viable second competitor in the server processor market, who has momentum and is gaining momentum.

The competitor is Advanced Micro Devices, which under the leadership of Chief Executive Lisa Su has come back from the brink of bankruptcy and has been taking business away from Intel quarter after quarter. Rau said that Intel and AMD would both face macroeconomic challenges related to rolling out their newest chips, but Intel also had the bigger issue of a chip glut to deal with. He said I don't think Intel is in a position to start recovering share in the market.

Customers of processors can't launch products if new chip designs are late, and Intel has stumbled on delivering its latest data-center chip, named Sapphire Rapids.

Sapphire Rapids was about two years late. Bob O'Donnell, of TECHnalysis Research, said AMD has leapfrogged them because of that.

According to Bernstein analyst Stacy Rasgon, AMD's latest server chip surpasses Sapphire Rapids in general purpose workloads, which is worse for Intel, according to the benchmarks published by the two companies.

Intel is competing with graphics chip maker Nvidia, as it branches into central processors and former processor customers, including Apple and Amazon, to design their own chips.

Gelsinger said that 2023 would be a year of stabilizing and re-acceleration. Intel had taken some painful steps and now needed to execute on a good plan, he said. Some agree.

Glenn O'Donnell, analyst at Forrester Research, said Intel's turnaround is taking some time, exacerbated by the economy. It is delivering on new products and its manufacturing is ramping up with agreements from other chipmakers to use Intel's manufacturing capacity. Investors are looking for the next piece of evidence: AMD will report its results on Tuesday.