Intel Reports Bleak Quarter as PC Sales Slow But investors are happy. | Tech Rasta

what happened

Intel’s revenue and profits have been declining in a time of economic downturn and years of efforts to reclaim its technology leadership. But layoffs and other cost-cutting measures helped support the stock.

why is it important

Intel is trying to bring chip manufacturing back to the US after TSMC in Taiwan and Samsung in South Korea outpaced the company.

After months of sanctions by skeptical investors, Intel shares rose 10 percent after the company reported better-than-expected earnings on Thursday. But that’s against the bad backdrop. As chipmakers lower their expectations for full-year results during the recession.

Intel reported net income of $1 billion, or 25 cents per share, for the third quarter, down 85 percent from a year earlier. Adjustments for items such as stock compensation and restructuring chargers, earnings of 59 cents per share were about 32 cents higher than analysts polled by Yahoo. Revenues of $15.3 billion were close to expectations of 15.2. billion dollar

Chief Executive Pat Gelsinger pointed to the “deteriorating economic conditions” but said the company was cutting costs, which resulted in $3 billion in savings in 2023 and $8 billion to $10 billion each. years by 2025, which will include layoffs, he said during a conference call about financial results

Intel shares were up 10% to $28.87 in midday trading Friday.

Bernstein analyst Stacy Rasgon called the quarter “dreadful” in a report on Friday. pointing to the decline in sales worse profit margin and the server processor business at He was also concerned about the scale of the dismissal: “The cut seemed quick and aggressive. which has a significant risk of disrupting current operations.”

But not all analysts are of the same opinion. New Street Research’s Pierre Ferragu said Intel is “going into fully responsive mode” and rated the company’s stock as a “buy.”

Intel cuts full-year revenue forecast to $63 billion to $64 billion. That’s a $2 billion drop to $4 billion from three months ago when Intel first reported serious sales problems in Disappointing June quarter.

Intel is in the midst of major changes under Gelsinger, which it hopes to restore its status as a leading chipmaker. In doing so, Intel spent a lot of money on new chip factories. It seeks to pursue the manufacturing technology already offered by Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung, and compete directly with the two Asian giants with the new foundry business being built. Processors for customers like Qualcomm

If successful, Intel stands to revive the US chip industry. And it gave life to years of exhausting PC hardware. Apple left Intel for its own M1 and M2 processors, which are built by TSMC and offer balanced performance and battery life.

Gelsinger said on Thursday that Intel has been losing market share in the PC market. But it will take a long time before the second main department. Server processors sold to companies like Dell and Google have more competitive products to challenge the soaring AMD.

Before Gelsinger returns to Intel in 2021, some observers expect Intel to follow in the footsteps of IBM and AMD, phasing out chip manufacturing and relying on other foundries. But Gelsinger wanted to maintain the company’s chip manufacturing process. with new technology and higher production volume through foundry business

“There are three types of semiconductor companies: Big, very specific. or dead,” Gelsinger said earlier this week. He was aiming for a big But years of ambitious efforts aren’t good enough for investors.

Intel experienced significant declines in its two largest chip groups. which produces the processors for the PCs we buy. and servers that power the data centers of companies like Meta and Google. PC chip segment revenue fell 17 percent to $8.1 billion. Meanwhile, the data center segment fell 27 percent to $4.2 billion.

Progress with Meteor Lake, the new server chip

Gelsigner is trying to paint a rosy picture on upcoming products.

On the PC side, including Meteor Lake, a PC chip scheduled for 2023 that combines a new 3D stacking technique, current Alder Lake laptop chips and Raptor Lake desktop PC chips are replacing. is “The numbers are amazing,” Gelsinger said.

And as for the Xeon server processors, Intel is affected by the delay of Sapphire Rapids today, but things are going well for its 2023 and 2024 successors, called Emerald Rapids and Granite Rapids, respectively. Gelsinger also touted. Progress with a low-powered sibling called Sierra Forest due in 2024.

“We had a particularly good quarter in executions,” Gelsinger said. and naming Sapphire Rapids, Granite Rapids, Emerald Rapids and Sierra Forest. And I feel that our worst actions are behind us.”

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