Intel
Results of operations. Intel broke a record in net revenues in 1995, for the
ninth consecutive year, rising by 41% from 1994 to 1995 and by 31% from 1993 to
1994. Higher volumes of the rapidly raising Pentium microprocessor family,
partially offset by lower prices, and increased sales of related board-level
products were responsible for most of the growth in revenues in 1994 and 1995.
Revenues from the Intel486 microprocessor family declined substantially in 1995
due to a shift in market demand toward the Company's Pentium microprocessors and
lower Intel486 microprocessor prices.
Higher volumes of flash memory and chipset products also contributed toward the
increase in revenues from 1993 to 1995 and also helped enable the successful
Pentium microprocessor ramp. Sales of system platforms, embedded control
products, and networking and communications products also grew.
Cost of sales increased by 40% from 1994 to 1995 and by 71% from 1993 to 1994.
The growth in cost of sales from 1993 to 1995 was driven by Pentium
microprocessor and board-level unit volume growth, new factories coming into
production, shifts in process and product mix, and in the fourth quarter of 1995,
by costs associated with unusually high reserves related to inventories of
certain purchased components. Gross margin for the fourth quarter of 1994
included the impact of a $475 million charge, primarily to cost of sales, to
cover replacement costs, replacement material and an inventory record related to
a divide problem in the floating point unit of the Pentium microprocessor. As a
result of the above factors, the gross margin percentage was 52% in 1995 and
1994, compared to 63% in 1993.
Quarterly unit shipments ...