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Intel says that customers in the creation of the inventory of chips at the US-China tension, boosts forecast

(Reuters) – Intel Corp forecast current-quarter earnings and revenue top estimates and it raised its full-year sales forecast on Thursday, allaying concerns about a worldwide sales of semiconductor manufacturing slowdown and curbs on sales in the united states, to Huawei Technologies Co., Ltd.

FILE PHOTO: a Computer chip manufacturer, Intel’s logo will be displayed on a gaming computer’s display on the opening day of E3, the annual video games expo, reveal of the latest gaming software and hardware in Los Angeles, California, USA, 11 June, 2019 at the latest. REUTERS/Mike Blake/File Photo

Intel’s shares rose 4.9% to $54.70 in the extended trade.

The chip industry is in for a slowdown, with the research firm Gartner is forecasting a decline in global semiconductor sales revenue of 9.6% to reach $429 billion by 2019. Chipmakers have been hit by one of the U.S.-china trade tensions, including tariffs on some products and restrictions on the sale to Ascend.

But these are not issues with Intel, which was the first chipmaker this week that beat analysts ‘ earnings estimates. On Tuesday, Texas Instruments (ti) Inc. was the first one to say that the U.S.-china trade tensions will not interfere with the ability to conduct business in China.

Intel’s Chief Financial Officer George Davis told Reuters it had resumed some of its sales to Huawei, which is in line with the US legislation, and that the rate of threats between the United States and China have actually helped in the second quarter, the sector’s turnover.

“The customers are with the delivery of the risk in the second half of the year, with respect to these items, drawn from some of the demand in the second quarter,” Davis said in an interview. “It’s not a net increase in the full-year (forecast), but it is certainly the risk of a number of of the year.”

Intel reported second-quarter revenue of $16.5 billion, and adjusted earnings of $1.06 per share. Analysts on average were expecting revenue of $15.7 billion and adjusted earnings of 89 cents per share, according to IBES data, Refinitiv.

But it was the company that made the prediction, that is the reason, equity, revenue, and profit is expected to be $18 billion, and $ 1.24 per share, for the third quarter, above analysts ‘ estimate of $17.72 billion, and $1.16 per share.

The company is estimated to be by 2019, a sales revenue of $ 69.5 billion, instead of the $69 billion it told investors to expect in April.

Intel also said it planned to sell the majority of its modem business, including its 2,200 employees, and it is a treasure trove of patents held by Apple Inc. for about $1 billion.

Davis told Reuters that the payment is in cash only. Intel will continue to have the rights of the non-smartphone devices for self-driving cars, and pcs are among the deals.

After several years of acquisitions outside of the core area of the processing of the chips of the previous leaders, the Chief Executive, Bob Swan has set itself the goal to become more self-disciplined about spending, and the slowing down of the investments in the field of memory chips, and the shedding of the wrestling business.

Dan Ives, of Wedbush Securities, said the sales were a step in the right direction.

“We believe further divestments of non-core activities would be given to Intel) are looking more attractive, while the management, in order to better focus on improving the key elements of the increase of the probability of future performance, but we are not yet convinced of the management’s will to move in this direction,” he said in a note.

Sales in Intel’s client computing business, which caters to personal computer manufacturers, and continues to be the largest contributor to revenue, rose to $8.84 billion, beating FactSet estimates of $8.13 billion.

The revenue from the higher margin data center business grew to a total of $4.98 billion, above estimates of $4.89 billion, according to FactSet.

Intel, the world’s leading provider of processor chips for pcs, for decades, have come to count on the data-center chips, with most of the growth in sales.

The company is estimated to have a value of up to $500 million after-tax gain from the sale of the modem business.

Net income fell to $4.2 billion, or 92 cents per diluted share, for the second quarter of $5 billion, or $1.05 per diluted share, a year earlier. Net sales decreased by 3% to $16.5 billion.

Reporting Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila and Richard Chang

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