Intel and TI upbeat on sales growth

Intel, the world’s largest semiconductor company, said on Thursday it was on course to hit third-quarter sales forecasts, while its nearest US rival, Texas Instruments, felt confident enough to raise its profit forecast significantly.

TI also announced a challenger to Intel’s Viiv brand, launched last month to target the digital home. TI said its new DaVinci platform was the most advanced semiconductor technology in the world for next-generation digital video.

In its mid-quarter update, Intel said it expected revenues to October 1 to be between $9.8bn and $10bn - narrowing the previous range of $9.6bn to $10.2bn.

“The company continues to see double-digit year-over-year growth driven primarily by strong demand for notebook PC platforms,” it said.

Gross margins were expected to be 60 per cent, plus or minus a point, while its tax rate should be around 30.5 per cent, it said. The Silicon Valley company warned the tax rate would probably be hit by additional taxes of about $250m due to a potential repatriation of about $6.3bn of accumulated income earned abroad.

Texas Instruments raised its expected earnings per share to September 30 from the 31 cents to 35 cents range, to 36 cents to 38 cents. Sales were expected to be between $3.48bn and $3.62bn, compared with $3.29bn to $3.56bn previously. Revenue forecasts for semiconductors, the bulk of its business, were raised from $2.835bn-$3.065bn to $3.02bn-$3.14bn.

“We are seeing good solid growth across the product lines,” said Ron Slaymaker, investor relations vice-president. The expected increase in earnings per share was due to improved gross margins, operating expenses being under control, higher levels of factory utilisation and an improved product mix, he said.

Intel shares were down 1.3 per cent at $25.76 in after-hours trading, while TI’s were up 1 per cent at $34.09.

Rich Templeton, TI chief executive, told a news conference its DaVinci platform would dramatically reduce the complexity manufacturers faced in producing video equipment.

DaVinci is expected to compact six to eight chips into one with TI’s fastest digital signal processor (DSP) at its core. It will also provide software support to handle the difficult transcoding of video in different formats between devices. Synchronising this at present was “as pointless as trying to listen to a CD on your old record player”, he said, predicting DaVinci would double already dramatic growth in devices such as TV set-top boxes, digital cameras and portable media players.

Intel’s Viiv brand will be introduced in homes on PC-like devices running Windows Media Center software. Mr Templeton said TI would work more with consumer electronics manufacturers.

“We’ve moved from an era where the PC has driven technology to an era where technology is being driven by entertainment,” he said.