Intel Sales Hit Record On Chip Demand As Shortage Lingers

Intel on Wednesday said 2021 was a record year for sales at the chip maker as it navigated unprecedented demand and supply chain constraints.

The US-based firm also saw costs rise and margins shrink as it shifted to a more sophisticated line of semi-conductors, analysts noted.

"The fourth quarter represented a great finish to a great year," said Intel chief executive Pat Gelsinger.

Intel revenue for last year tallied $79 billion, some $20.5 billion of which it took in during the final three months, according to its earnings report.

Profit in the quarter was $4.6 billion, however, in a 21 percent decrease from the same period a year earlier.

Profit for 2021 totaled $19.9 billion, about five percent less than the net income in the prior year.

Last year was marked by "unprecedented demand tempered by supply chain constraints" that are expected to continue through into next year, Gelsinger said during an earnings call.

A global computer chip shortage has afflicted a broad array of industries from smartphones and laptops to cars and home appliances.

US chip giant Intel finds itself at the heart of this phenomenon, benefiting from heightened demand but facing challenges producing ever more sophisticated semiconductors driving modern devices.

Intel has invested heavily in semiconductor production in the United States and Europe over the past year, with a recently announced strategy that relies on expanding in-house manufacturing and increased use of subcontracted factories.

US lawmakers were studying proposals Wednesday to jumpstart high-tech research and manufacturing, boost competition with China and ease a global shortage of crucial computer chips.

The House Democrats' "America Competes" bill is their version of the Senate's $200 billion US Innovation and Competition Act, aimed at addressing supply bottlenecks.

Whether bi-partisan support needed will manifest in an election year remains to be seen, said analyst Rob Enderle of Enderle Group.

"With the chips act going on the floor of the House, we are highly encouraged," Gelsinger said on the earnings call.

"We are optimistic on this coming across the line."

US President Joe Biden has praised Intel's plans to spend $20 billion on a new US semiconductor facility, hailing the "historic" investment.

Biden is urging manufacturers to bring production back to the United States, which was once a leader in making the chips which have become scarce during the pandemic.