DCG -- which deals in server chips -- is Intel's second-largest business and most profitable unit. Analyst TBR predicted double-digit revenue growth for DCG in 2016, driven by growth in server chip shipments and high-performance computing products.
Demand for server processors was strong in the communications and cloud markets during the fourth quarter, Krzanich said.
Intel is shipping Broadwell-based server chips in the first quarter this year. The company will also start shipping samples of its server chips with Altera's FPGAs (field programmable gate arrays) -- which are reprogrammable chips -- to select cloud customers this quarter. Intel closed the $16.7 billion acquisition of Altera on Dec. 28.
Intel this year will also release a new class of memory and storage called Optane for PCs and servers, which the company claims can be 10 times denser than DRAM, and 1,000 times faster and durable than flash storage.
Intel has unsuccessfully tried to diversify into the smartphone and tablet market. Intel's Atom chips are in a handful of smartphones and were in million of tablets that shipped in 2015, but the company has lost billions of dollars in the chase.
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