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Wednesday, April 14, 2010, 12:50 pm PT (03:50 pm ET)

Intel profits quadruple as chip maker says industry has recovered

Intel, the maker of processors for Apple's entire line of Mac computers, reported record earnings this week, with its strongest first quarter in the company's history fueled by demand for new microprocessors.

Intel reported first-quarter revenue of $10.3 billion, with an operating income of $3.4 billion, net income of $2.4 billion, and earnings per share at 43 cents. Officials said it was the company's best first quarter since 1968, and CEO Paul Otellini said the industry is "nearly fully recovered."

"The investments we're making in leading edge technology are delivering the most compelling product line-up in our history," Otellini said. "These leadership products combined with growing worldwide demand and continued outstanding execution resulted in Intel's best first quarter ever. Looking forward, we're optimistic about our business as Intel products are designed into a variety of new and exciting segments."

According to The Wall Street Journal, Intel's quarterly profit nearly quadrupled and revenue rose 44 percent. The company also plans to hire between 1,000 and 2,000 new workers, its largest expansion in five years. The company also has an optimistic outlook for the second quarter of calendar 2010, a three-month period that is typically slow for the computer industry.

Otellini also noted that demand for Intel's new processors has been "incredible." Among those are the new Core i7 and Core i5 chips, both of which found their way into Apple's top-of-the-line MacBook Pros with a hardware upgrade released on Tuesday. Both the 15-inch and 17-inch MacBook Pro models feature Intel Core i5 and i7 processors, as well as integrated energy efficient Intel HD Graphics processors.

Using proprietary graphics switching technology, Apple's latest high-end MacBook Pros dynamically switch between the Intel integrated graphics and a new discrete Nvidia GeForce 330M graphics processor. In addition to offering battery life of between 8 and 9 hours, Apple's graphics switching also ensures compatibility with Intel's new Arrandale mobile processors, which feature the major northbridge chipset memory controller components built in.

In addition to the architectural changes Intel made with the Core i5 and Core i7 mobile processors, an ongoing lawsuit with Nvidia has forced the graphics card maker to halt the development of future chipsets. Apple's software solution also allows users to switch solely to discrete graphics and bypass Intel's low-power integrated option if they choose.

In addition to Apple's line of Mac desktops and notebooks, Intel supplies the processors that run about 80 percent of the PCs in the world. A global economic downturn that had a severe impact on the computer industry left a mark on Intel, but the chip maker now believes the industry is nearly out of the woods. Otellini said there are signs that companies are ready to upgrade their computers, because it is beginning to make economic sense.

"It is the first quarter where we have seen some real signs of PC purchases, corporate SKUs picking back up again," the CEO said. "Some of that was wrapped around our new products — the Arrandale notebook products — but some of that was also even just some of our older SKUs that are classic running corporate SKUs also picked up. To me that suggests the average fleet of notebooks is four years old out there. The average fleet of desktops is five years old."

For the second quarter of 2010, Intel has forecast revenue of $10.2 billion, with 64 percent gross margin. That would be a 27 percent increase from the second quarter of 2009, said Intel Chief Financial Officer Stacy Smith.