Chipmaker Xilinx's profit tops estimates, sees return to growth

XILINX Inc, the chipmaker in takeover talks with Advanced Micro Devices Inc, reported earnings that beat Wall Street estimates and said that revenue will start growing again in the current period.

Sales will be US$750 million to US$800 million in the three months ending in December, the San Jose, California-based company said.

Revenue even at the low end of the forecast would represent the company's first quarter of year-over-year growth in five such periods.

Analysts on average projected US$774 million. Xilinx chief executive officer Victor Peng is trying to spread the use of his company's products into new areas such as data centres while combating the impact of disappearing sales to Huawei Technologies Co and the global pandemic.

The company is also negotiating a possible takeover by AMD, according to people familiar with the matter. Xilinx executives, speaking on a conference call, declined to discuss the potential deal.

The chipmaker is confident the effort to push into data centres can sustain double-digit growth, even if orders are "choppy", Mr Peng said.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Xilinx reported that data centre sales were up 30 per cent in the fiscal second quarter and now account for 14 per cent of the company's total revenue.

"The data centre market is being disrupted and we offer a lot of value," he said in an interview.

While Xilinx sales come primarily from industrial and communications equipment makers, it's carving out a new niche in supplying owners of large data centres who use the chips to accelerate certain workloads.

Its field programmable gate arrays, or FPGAs, are unique in that they can have their function changed by software even after they've been installed in computers and other devices.

AMD is trying to restore its fortunes in the data centre processor market, clawing its way back from less than one per cent market share and gaining share from Intel Corp with new products.

The loss of Huawei as a customer due to US trade restrictions and Covid-19 have hurt Xilinx's expansion plans, but long-term the company remains on track to achieve overall sales growth of more than 10 per cent a year, Mr Peng said.

In the fiscal second-quarter, sales declined 8 per cent to US$767 million. Net income was US$194 million, or 79 cents a share, compared with US$227 million, or 89 cents, in the same period a year earlier.

Profit, excluding some items, was 82 cents a share, ahead of analysts' estimates. BLOOMBERG