By Chavi Mehta, Max A. Cherney and Stephen Nellis
(Reuters) -Intel forecast fourth-quarter revenue above Wall Street estimates on Thursday, optimistic about a healthy rebound in client orders for its chips after an inventory buildup of several quarters in the PC market eased.
Shares of the Santa Clara, California-based company rose roughly 6% after the closing bell.
The decline in global PC shipments narrowed to 7% in the third quarter after double-digit percentage dips earlier this year, and the market is set to return to growth during the highly anticipated holiday season, analysts at research firm Canalys said.
The company forecast adjusted current-quarter revenue of about $14.6 billion to $15.6 billion, compared with an estimate of $14.35 billion according to LSEG data.
The company expects fourth-quarter adjusted profit per share of about 44 cents, above analysts' estimate of 32 cents.
Heavy manufacturing investments to support Chief Executive Pat Gelsinger's turnaround plans have taken a toll on the company's gross margin, which shrank to the mid-30s in the second quarter from over 60% in 2020. The adjusted gross margin came to 45.8% in the third quarter, compared with estimates of 42.7% according to LSEG data.
Gelsinger told Reuters in an interview that Intel has a fourth foundry customer for its advanced manufacturing process called "18A" that it expects to close in the fourth quarter.
Intel reported adjusted profits of 41 cents per share in the third quarter, compared to an estimate of 22 cents according to LSEG data. Revenue fell 8% to $14.2 billion.
Revenue in the client segment, which houses Intel's PC business, fell 3% to $7.9 billion. Sales at its data center business dropped 10% to $3.8 billion.
Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, said earlier this month end-user demand for PCs and smartphones had started showing signs of stabilization, adding that inventory controls were "more healthy than we thought."
(Reporting by Chavi Mehta in Bengaluru and Max A. Cherney in San Francisco; Editing by Krishna Chandra Eluri and Richard Chang)