Intel profits down 90% despite Atom boost

Huge profits drop at Intel, although future of Atom looks bright
Huge profits drop at Intel, although future of Atom looks bright

Intel may be powering a new generation of netbooks with its low-cost, low-power Atom processor, but it's not getting rich as a result.

The chip-making giant made just $234 million (£158 million) profit on sales of $8.2 billion (£5.5 billion) in the last quarter of 2008: that's a tenth of the money it made the previous quarter, or the same time last year.

Part of that is down to a $1 billion (£675 million) investment in WiMax mobile broadband company Clearwire, but there's no doubt the processor manufacturer has been hit by the economic downturn.

What goes down, must (eventually) come up

"The economy and the industry are in the process of re-setting to a new baseline from which to grow," guessed Paul Otellini, President and CEO of Intel.

"Intel has weathered difficult times in the past. Our new technologies and new products will help us thrive when the economy recovers."

Two glimmers of hope: revenue from Intel Atom processors and chipsets was $300 million (£200 million), up 50 per cent on previous quarters. And excluding the bargain basement Atom chips, the average selling price of processors was actually up in the Q4 2008.

Looking into 2009, Intel is not even speculating about potential profits, although it has said that it expects to sell about $7 billion (£4.8 billion) worth of processors in Q1 2009.

Mark Harris is Senior Research Director at Gartner.