Intel reports Q2 revenues of $16.96B, up 15% YoY, Client Computing Group revenue of $8.73B, up 6% YoY, and Data Center Group revenue of $5.55B, up 27% YoY
"PC volumes were down 1 percent year over year even as the average selling price for desktop products rose 13 percent, Intel said." https://cnb.cx/2OlQzt1 // mature market with captive demand means higher prices Mike Rogoway / @rogoway : Intel doesn't have a CEO, and says its next-gen processors won't be out 'til next year — four years behind schedule.Hard times? You'd never know it from the company's financial results. Sales up 15% YoY. http://www.oregonlive.com/... Ben Bajarin / @benbajarin : Intel with a record ($17b) second quarter 2018. - Rev up 15% YoY- Data centric business up 26% approaching 50% of total revenue. - PC/Client revenue 6%Intel's shift to a data center company in full swing.
Context & Ripple Effects
This is the second straight blowout quarter in Intel's 2018 run: April's $16.1B Q1, up 13% YoY already showed both segments accelerating, and Q2 extends it to a record ~$17B with Data Center Group up 27%. What makes the print remarkable is what was happening underneath it — Mike Rogoway notes the company had no permanent CEO and had pushed its next-generation processors out another year, four years behind schedule.
The arc matters because the strength did not last on the data center side: by mid-2021 Intel reported Data Center Group revenue down 9% YoY even as PC unit sales jumped 33%, and the year after this quarter total revenue actually fell 3% (Q2 2019). The 2018 numbers look, in hindsight, like a pricing-power peak rather than a new baseline.
First-order effects
- Intel is extracting price instead of volume: PC shipments fell 1% YoY while desktop average selling prices rose 13%, meaning Client Computing's 6% growth came almost entirely from richer mix, not more machines sold.
- Data Center Group's 27% growth to $5.55B is carrying the company through a leadership vacuum and a next-gen processor slip to next year — customers are buying current-generation parts at full price because there is nothing newer to wait for.
Second-order effects
- A four-year processor delay hands rivals a multi-year window against an incumbent charging rising prices for aging silicon; every quarter of slippage raises the value of whatever competing server and client parts reach market first.
- Captive demand at higher ASPs flatters the P&L but masks share risk — when supply tightness or the product gap eases, buyers who paid premium prices for old-generation parts have an incentive to switch, which is consistent with the data center decline that shows up in later quarters.
Third-order effects
- The pattern here — record revenue coexisting with execution failure — illustrates how semiconductor demand cycles reward incumbents on price long after their roadmap stumbles, deferring the competitive reckoning until capacity or alternatives arrive.
- If the follow-on quarters hold the lesson, segment-level reporting becomes the tell: PC pricing power proved durable (units up 33% by 2021) while data center strength proved cyclical, so investors increasingly read Intel's two businesses as separate stories rather than one growth engine.
The trend: Intel's 2018 results are a data point in the broader dynamic where supply-constrained chip demand lets an incumbent monetize an aging product line at rising prices, delaying — but not canceling — the cost of roadmap delays.