Intel ended 2019 on a high note, with all-time record revenues of $72 billion, an increase of 2% over the prior year.
For the fourth quarter, revenues were up 8% over the previous year, reaching a quarterly record of $20.2 billion. Net income for the quarter was $6.9 billion, an increase of 33% over the same quarter in 2018.
“One year into our long-term financial plan, we have outperformed our revenue and EPS expectations,“ CEO Bob Swan said. “Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns.”
For all of 2020, Intel expects to reach $73.5 billion in revenues, another record, with $19 billion in the first quarter. The operating margin will reach 31% for the full year, Intel said.
Intel’s stock price reached $63.32 shortly after the market close, up by nearly 1%.
Mobileye, the advanced driver-assistance systems group at Intel, saw a 26% increase in 2019 revenues to $879 million and a record 31% increase for the fourth quarter over a year earlier, hitting $240 million.
The Data Center Group saw a 2% increase in annual revenue to $23.5 billion. That group also saw record revenues in the fourth quarter, growing by 19% to $7.2 billion. Intel cited robust demand from cloud service provider customers and sales of high-performance second-generation Intel Xeon Scalable processors. The company also acquired Habana Labs in the fourth quarter in a bid to strengthen artificial intelligence capabilities in the data center.
The Internet of Things group saw a 13% increase in the fourth quarter over a year earlier, primarily on strength in retail and transportation, Intel said. For all of 2018, that group saw an 11% increase, reaching $3.8 billion.
The only business unit to decline at Intel was PSG (Programmable Solutions Group) down by 17% to $505 million in the fourth quarter and down by 6% for the full year to $2 billion. Intel’s PSG offers field programmable gate arrays and complementary power solutions.
Intel’s client computing group increased by 2% to $10 billion for the quarter and reached $37 billion for all of 2019, basically flat compared to 2018. Higher modem sales and desktops bolstered the increase. A total of 44 systems feature the 10nm-based Intel Core processors, code named Ice Lake. Also, 26 laptop designshave been verified as part of the Project Athena innovation program.
Critics of Intel have raised concerns that the chip giant has fallen behind for a long period in shipping PC chips. However, some analysts believe its investments in artificial intelligence will lead to long-term growth.
Swan told analysts that Intel is adding 25% wafer capacity in its fabrication facilities for 10nm and 14nm production, even as demand continues to outpace supply.
Intel also expects nine new products on its 10nm process in 2020 and its first discrete GPU for AI inference acceleration. Swan confirmed that the Ponte Vecchio chip on the 7nm process is still on track for end of 2021, with a CPU coming in 2022.
“The market for AI-based silicon is growing and evolving quickly,” Swan told financial analysts in an earnings call. Intel saw $3.8 billion in AI revenue in 2019. With an AI market reaching $25 billion by 2024, “we are investing to lead with a strong portfolio,” he added.