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In the fourth quarter, the Data Center Group (as it is still called in Intel's financial presentations) had sales of $2.83bn, up 4 per cent from a year ago and up 7 per cent sequentially. The Sandy Bridge ramp was rolling along, Otellini said.The volume of chips and chipsets was flat sequentially and actually down from a year ago, but average selling prices for server, storage, and switch chips were up 5 per cent from a year ago as the mix shifted towards higher priced SKUs and, interestinglyenough, good uptake of "MP products," which is Intel shorthand for servers with more than two processors.The Data Center Group posted $1.33bn in operating income, which was down 8.5 per cent. So something was eating into those server profits even with the revenue bump.For the year, the Data Center Group had $10.7bn in revenues, up 6 per cent, and posted $5.07bn in operating income, down a half point. For the full year, chip volumes were off 1 per cent but ASPs were up 4 per cent. In his CFO commentary, Smith said that a richer mix of chip sales in the data center (probably helped a bit by Itanium and the four-socket Xeon E5-4600 as well as fat configurations of the Xeon E5-2600) as well as "significant growth" in cloud server sales was partially offset by weakness in the enterprise server market.

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Looking ahead, Smith said on the call that Intel expected for the data center side of the Intel house would return to double digit growth in 2013, helped no doubt in part by the Ivy Bridge refresh coming in the second half.Intel is looking for low single digit growth for the year in the PC Client Group, which makes chips and chipsets for anything that is not in the data center or in an embedded device. This would be driven by the Haswell ramp for PCs during the first half of the year and extending out from there.Smith said that Intel was qualifying Haswell for sale during the current quarter (meaning Q1 2013) and that it had already done some writeoffs late last year relating to early production runs on Haswell.In the fourth quarter, the PC Client Group booked $8.51bn in sales, down 6 per cent, and its operating income was $2.82bn, down a much steeper 19.6 per cent. Intel said that OEM customers who build PCs were reducing chip inventories, and Intel took actions in the fourth quarter to rebalanced its fab capacity to ramp up 14 nanometer processes, which will be used for the "Broadwell" family of PC chips in 2014. In any event, PC chip volumes were down 6 per cent and ASPs were flat in Q4.

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This year, Intel expects to have about the same level of capital expenses and will fork out $2bn to start doing the initial facilities for 450 mm wafer manufacturing, which is not expected to go volume until the latter half of this decade.Smith said that he expected that 450 mm gear would be available around 2015 or so, and would not comment on if the 10 nanometer technologies that could be paired with it would use immersion or extreme ultraviolet (EUV) technology to etch wafers.What Otellini was emphatic about was that Intel continue to invest in wafer baking and fabs."As I look forward into the business in 2014 and 2015 as we finish up the 14 nanometer factories and begin deployment and construction and equipping of the 10 nanometer factories, we need those factories," Otellini said.
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Last Updated September 6, 2018