Intel’s Q1 earnings reports are out, and the company has once again beaten estimates by over a billion dollars, with quarterly revenue of $18.6 billion. While the Client Computing Group (CCG) which mainly comprises desktop and mobile CPUs saw record revenue of $10.6 billion, an increase of 8% YoY, the Data Center Group (DCG) saw a notable dip of 20% YoY, dragging it down to $5.6 billion.
Similar to the consumer business, the IoT Group saw a moderate gain of 4%, bringing the quarterly revenue from the business close to nearly a billion. Mobileye saw a much higher increase of 48% ($377 million) while the Programmable Solutions Group (PSG) primarily consisting of the Agilex FPGAs saw a drop of 6% to $486 million.
The Client Computing Group was primarily driven by the notebook business, with a yearly gain of 19% in sales figures for notebook CPUs and a drop of 7% for desktop parts. The Average Selling Prices (ASP) were red across the board, with the notebook market seeing a YoY drop of 23% and the desktop products falling by 5%. The operating margin for the CCG was more or less the same as last year, with a drop of 4%, from 43% to 39%.
The Data Center Group saw a drop of 20-30% in sales across the Cloud and Enterprise markets, with the ASP dropping by 14%. The Operating Income dropped by 64% YoY, most likely on account of the lower profit margins with the 3rd Gen Xeon Scalable processors and increased R&D investment.
Compared to the previous quarter, the sales volume of the Data Center Group fell by 9%, while the Average Sales Price (ASP) stayed the same. The CCG saw a decrease of 19% in desktop CPU sales, while the ASP increased by just 4%. The notebook sales volume increased by 5% while the ASP fell by 4%.
Intel’s Q2 outlook is more or less the same as Q1, with an overall revenue target of $17.8 billion, 2% lower than last year and nearly a billion lower than Q1. The gross margin is also expected to stay nearly the same, with an increase of just 1%.
Intel expects a lower CPU volume sold through the remainder of 2021 as the transition from 14nm to 10nm takes place. The 10nm production is expected to overtake the existing 14nm lineups in the second half of 2021, with the company aiming to ship over a million PCs a day. This will be largely due to the sales of the Xeon Ice Lake-SP parts and the upcoming Alder Lake-S units, with Tiger Lake and Ice Lake-U also adding significantly to the overall quantity.