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Moreover, Intel also predicted that its first-quarter revenue would be flat, or equal to the sales it generated during the peak holiday season.
Intel reported record net income of $3.4 billion on record revenue of $11.5 billion. Net income climbed 15 percent sequentially and 48 percent year-over-year. Intel's revenue represented a 3 percent sequential increase and 8 percent year-over-year growth.
Company executives also answered questions about how Intel plans to keep up with ARM and other embedded competitors in the tablet space and other embedded markets: Moore's Law. That aggressive manufacturing push will see Intel move to a "four fab" strategy, where four, rather than three, leading-edge 22-nm fabs will be used.
"Many of you have asked us how we wll compete with ARM," said Paul Otellini, Intel president and chief executive. "Our answer is very simple: apply the world's most advanced silicon technology," to produce the lowest-power, highest-performance chips, he said.
And the funding for such came during 2010, when ASPs rose to higher levels than expected during the fourth quarter.
"We got paid in terms of rising ASPs," said chief financial officer Stacy Smith, which funded the re-investment of the additional revenue. Executives described a scenario where they were able to save at least part of their investment on 32-nm investment by quickly converting 45-nm fabs.
Intel has already developed microprocessors on the 22-nm process, and Intel is running test chips. The company will ramp wafers in the second half, with a product launch "at some point to follow," he aid - if history holds, in early 2012.
"2010 was the best year in Intel's history. We believe that 2011 will be even better," Otellini said in a statement, who predicted in the conference call that the Windows 7 corporate refresh was "not halfway yet".
Server chips carried the company, as the Data Center Group reported a 15 percent increase in revenue. Client revenue - including PC processor revenue - was flat, as well as the $391 million Intel pulled in from its Atom business. Intel recently launched its "Sandy Bridge" microarchitecture, or its next-generation Core chips; Otellini predicted that they would be a "home run" and drive over 30 percent of the company's 2011 corporate revenue.
The growth in servers is being driven by the pace of traffic transferred over the Internet, Otrellini said: 245 exabytes in 2010, more than all other years combined. In five years, more than a billion people will join the world's Internet community, leading to a total traffic throughput of about 10,000 exabytes.
Specifically, revenue for the Intel architecture group was $11.0 billion, up 3 percent sequentially and 8 percent year-over-year. PC Client group revenue was $8.0 billion, up 3.5 percent year-over-year. The Data Center Group reported revenue of $2.5 billion, up 15 percent sequentially and 24 percent year-over-year. The "other Intel architecture group revenue was $500 million, flat versus the third quarter and up 21 percent year-over-year.
"2010 was by far our most profitable year, Stacy Smith, Intel's chief financial officer, said in a statment. "In 2010 demand for microprocessors resulted in record revenue of $43.6B, up 24% year over year. We saw strong market growth in both the business and consumer PC market segments. Additionally the server market segment was particularly strong."
Intel also achieved its feat as PC growth slowed, as tablets began to cut into the traditional desktop and notebook. Intel also recently began a tablet division.
"There sure is an obsession over tablets, and nearly commensurate dismissal of netbooks," said Bill Kircos, the newly-appointed general manager of marketing in the Netbook and Tablet Group, run by Doug Davis. "The truth is, ultra-thin hybrid or 'convertible' devices are quickly emerging, some with multiple OSs, that will let people 'snack' or work as they choose. These require more horsepower, and today anyway, only Intel offers multiple OS choices."
Otellini said that in 2011, Intel's Atom chips would be in a "wide array of tablets" including those powered by Windows and Android. In the second half, Atom tablets using the MeeGo OS will be introduced, he said. For the year, Intel reported net income of $11.7 billion in revenue of $43.6 billion. Net income climbed 167 percent from 2009, and revenue was up 24 percent.
Intel predicted that first-quarter revenue would be $11.5 billion, plus or minus $700 million.
