Chavi Mehta and Jane Lanhee Lee

(Reuters) -Chipmaker Intel Corp (NASDAQ): Despite posting record fourth quarter revenue, the company forecast first-quarter earnings that fell short of Wall Street’s expectations. The world’s biggest chipmaker is facing challenges due to ongoing global supply chain problems.

Intel shares lost 3% in late trading but gained some ground when the company voiced confidence in its demand and ability to control supply chain restrictions.

Patrick Gelsinger, the Chief Executive Officer of Chips International said in a conference call that those limitations would persist into next year due to “unprecedented chips demand”.

According to Refinitiv’s IBES data, the company expects first quarter earnings per share to be 80 cents. This is compared with a expectation of 86c.

Intel’s Gross Margin Forecast of 52% for 2012 fell below the previous range that it forecasted over the next 2 to 3 years. But, the number raises concerns.

Kinngai Chen, senior analyst for Summit Insights Group, stated, “With high capex spend plans, we believe Intel’s Gross Margin could come under more Pressure.”

This outlook was more important than the fourth quarter results. Intel vice president for investor relations Tony Balow said that it was record breaking and exceeded expectations. Analysts had expected $18.3billion in adjusted revenue. The adjusted earnings per share rose to $1.09 from $19.5 billion.

In the most recent quarter, revenue from Intel’s high-margin business in data centers rose 20% to $7.3Billion. This is also an unprecedented level for this category. According to FactSet data, analysts had an average revenue expectation of $6.73 trillion.

All of our businesses continue to experience strong demand. After the earnings release, Balow said that he saw exceptional execution from his factory network. This allowed him to meet this demand in this difficult environment.

Based on Refinitiv IBES data, $18.3B is the expected revenue for the first quarter. This figure surpasses analysts’ average estimates at $17.62B.

It is expected that its chip-making capabilities will be able to satisfy strong consumer demand for PCs, data centers and artificial intelligence even in a worldwide shortage of semiconductors.

Intel is one of few semiconductor companies which designs and manufactures its chips. This has allowed it to better weather the supply chain.

Last week, Intel announced it https://www.reuters.com/technology/intel-plans-new-chip-manufacturing-site-ohio-report-2022-01-21 was investing $20 billion for two chip factories in Ohio that could eventually become the world’s largest chip making complex with up to eight planned.

Investors pay attention to how quickly and successfully Intel builds these factories. Analysts are speculating on a potential glut in a period when both Intel and rivals Taiwan Semiconductor Manufacturing Co. as well as Samsung Electronics (OTC:) Co. have also been building factories.

Logan Purk, Edward Jones analyst at Intel said that Intel must execute the plan to achieve revenue growth of more than 10%.

Gelsinger spoke on conference call, stating that severe inflation means having more chip manufacturing capacity to help offset costs and provide healthy cashflow.

He stated that Intel might have additional spinoffs, such as Mobileye (F) autonomous vehicle unit which it plans to list next year. Gelsinger stated that the process is “progressing smoothly”.

Gelsinger said, “I will not say that that’s our last option that we consider.” As we look into the future, “we see this as an opportunity to add value. We also think that there may be other opportunities that would benefit from such a purchase by the Intel family.”