Intel’s 1q Report To Set Chip Tone

Intel, the No. 1 chipmaker, is scheduled to report first-quarter results after markets close Tuesday. As always, Intel’s report will be a bellwether for the semiconductor industry.

Earnings are expected to be good but not as dramatically higher than last year, when they were compared with the 2010 downturn.

Early chip signals have been bullish: last week, market researcher Gartner (NYSE: IT) reported first-quarter PC shipments rose nearly 2 percent. The Semiconductor Industry Association boosted its full-year forecast. Intel’s flash-memory partner, Micron Technology (NYSE: MU) reported better-than-expected second-quarter results.

Analysts surveyed by FactSet Research expect Intel to report earnings around $2.5 billion, or 50 cents a share, on revenue of $12.84 billion, compared with $3.2 billion, or 56 cents, on revenue of $12.8 billion, a year ago.

Intel’s results usually don’t exceed estimates. At UBS, analyst Uche Onji agrees with the 50-cent estimate, noting that average sales prices for new microprocessors remain firm. At Tokeneke Research, analyst Dan Scovel also expects Intel to match estimates.

As the No. 1 semiconductor maker, Intel usually provides a forecast for the coming quarter. If Intel’s usual “business outlook” is good, that should indicate new demand for PCs, servers and other other products using its new Ultrabook chips and older processors.

Unlike many chipmakers that outsource production, Intel retains just about all its wafer fabrication in-house, with a global manufacturing presence in countries including China, Ireland and Israel, with assembly and test plants in Malaysia, China, Costa Rica and Vietnam, says ibtimes.

In the fourth quarter, Intel reported cash and investments exceeding $16.2 billion, plenty to fund continued expansion as well as research and development. Last year, Intel invested $8.4 billion in research, more than International Business Machines Corp.

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