After the bell on April 27, chip giant Intel (NASDAQ:INTC) reported its first quarter financial results and updated its full-year financial outlook. The company reported $14.8 billion in revenue, precisely hitting the guidance that it gave last quarter.
Although merely hitting guidance for the quarter isn't exactly impressive, the company did hike its full-year revenue outlook a smidgen from $59.5 billion to $60 billion at the midpoint of its guidance range. In the grand scheme of things, $500 million isn't much -- it represents less than a 1% increase from the original guidance -- but good news is good news.
Intel said that better-than-expected average selling price performance in its personal computer chip business helped to drive this slightly higher full-year outlook.
No change in TAM, it's all on average selling prices
Intel was clear that it isn't revising its expectations around the unit total addressable market (TAM) within the personal computer -- it's still banking on a "mid-single digit percentage decline" in the PC TAM.
However, Intel CEO Brian Krzanich said that the company's average selling prices (ASPs) are "trending ahead of expectations and are contributing to [Intel's] slightly higher revenue expectations for the full year."
Krzanich attributed the ASP growth to its "annual cadence of product innovation combined with a thoughtful segmentation strategy."
Digging into the details
The personal computer average selling price performance that Intel saw wasn't limited to just desktop or notebook computer chips -- it was evident in both. Intel reported that it saw a 1% boost in notebook platform unit shipments last quarter, with average selling prices surging 7%.
The situation in desktop computer platforms -- which have generally suffered as users opt for more portable notebook computers -- was less exciting, but the average selling price trend was evident there, too. Intel said that desktop platform volumes plunged 7% year-over-year, but that this was partially offset by 2% growth in average selling prices.
An eye toward the future
On the call, analyst Vivek Arya asked management about the sustainability of the average selling price performance that Intel is enjoying in its personal computer business.
Krzanich began with the following:
Each quarter we come in here and we say we're a little concerned about the sustainability of those high ASPs, and we continue to have that, so we always forecast -- if you take a look at what we forecasted [sic] for the remainder of the year, we've forecasted [sic] a slight decline in ASPs as we move throughout the year.
The executive then took the opportunity to point out that despite the apparent caution that the company is baking into its average selling price expectations for the remainder of the year, Intel is taking actions to try to keep average selling prices high.
"We're continuing to pull in products, and the demand for those high-end, high-performance products, from 2-in-1s, gaming, high-end workstations continues to grow faster than we are even able to project," Krzanich said.
Indeed, a recent report from DIGITIMES said that the company has pulled in its upcoming high-end desktop Skylake-X product family by about two months and is now expected to launch on May 30. That same report also said that the company's unlocked Coffee Lake-S chips for enthusiast gamers has been pulled in from a January 2018 release to an August 2017 release.
It'll be interesting to see if the roll-out of these products, as well as the company's upcoming eighth-generation Core chips for notebooks, helps Intel outperform its current average selling price expectations as the year progresses.
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