Intel beat expectations in both revenue and earnings during Q4 2021, and CEO Pat Gelsinger was not slow to point it out, speaking on the company's earnings conference call (as transcribed by Seeking Alpha).

"We exceeded our guidance for the quarter by over US$1 billion on the top line, finishing with our best quarter and our best full-year revenue ever," he said at the start of his presentation.

Fueled by a stellar top-line performance from the chip giant's data center group (DCG), Intel posted Q4 adjusted revenue of $19.5 billion, up 4% year-on-year. It was Intel's best-ever quarterly revenue performance and well in excess of the $18.3 billion the company previously guided.

Full-year turnover, again on an adjusted basis, was $74.7 billion (up 2% from 2020). Adjusted earnings per share (EPS) for Q4 came in at $1.09, beating an expectation of $0.79.

Figure 1: Chipmaker Intel exceeded its guidance for the quarter by more than $1 billion, finishing with its best quarter and best full-year revenue ever (Source: Ruslan Lytvyn/Alamy Stock Photo)

DCG was a star Q4 performer, notching up a 20% year-on-year increase in revenue to $7.3 billion. "We expect that our Xeon shipments in December alone exceeded the total server CPU shipments by any single competitor for all of 2021," enthused Gelsinger.

He anticipated that the data center, network and edge markets will "continue to have robust growth as hyperscalers lay out multi-year cloud capex investment plans."

It's not all rosy

Although Gelsinger highlighted "unprecedented demand" for chips, he said this was "tempered by supply chain constraints." The CEO explained that "shortages in substrates, components and foundry silicon [have] limited our customers' ability to ship finished systems."

Gelsinger said he expects shortages to persist throughout 2022 and into 2023. The impact has been "most acutely felt in the client market, particularly in notebooks, but constraints have widely impacted other markets, including automotive, the Internet of Things and the data center," he added.

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Intel's gross margins are also being squeezed, narrowing to 53.6% compared with 56.8% during Q4 2020.

"This is a sign of the difficulties that Intel is currently facing," said Richard Windsor, an analyst at Radio Free Mobile. "In a time of shortages and high demand, margins should be going in the other direction."

Windsor said a "resurgent AMD" was most likely to blame, "which has been out executing Intel for some time now [and] put pressure on pricing."

Intel forecast a Q1 2022 EPS of $0.80 cents versus an expectation of $0.86 cents, according to IBES data from Refinitiv (as reported by Reuters).

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— Ken Wieland, contributing editor, special to Light Reading