Intel predicts modest growth

godzilla_3130893bChipzilla has predicted that it will return to modest growth next year, after seeing a decline in 2015.

It claimed that demand for chips for data centres and other products outside the PC market will help it get back on track.

In a meeting with Wall Street analysts, Intel also announced a dividend increase.

Brian Krzanich, Intel’s chief executive said that Chipzilla would report $55.2 billion in revenue for 2015, in line with Wall Street estimates. That is about one percent less than Intel reported in 2014.

He issued a forecast calling for revenue growth “in the mid-single digit” percentages in 2016. It put its gross profit margin at 62 percent, the same as it projected for all of 2015.

Intel gets most of its revenue from chips for personal computers, a market that has been declining lately. Krzanich said the company has hopes for improved demand in 2016 based on Skylake chips, and Microsoft’s new Windows 10 operating system.

But Krzanich stressed that Intel could grow even if the PC chip business keeps declining, largely because of demand for memory chips and processors used in servers and varied devices represented by a trend called the Internet of Things.

He estimated that non-PC chip businesses currently represent about 40 percent of total revenue but 65 percent of operating profit, because the chips command higher prices.

Intel also projected 2015 capital spending at $10 billion, plus or minus $500 million, including about $1.5 billion on investments to make memory chips. That is an increase over its $7.3 billion projection for 2015.