Intel declares huge loss but hopes for better in 2026

Business news | November 2, 2024

By Peter Clarke

semiconductor Intel

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Intel made a net loss of US$16.6 billion on sales revenue of US$13.3 billion in the 3Q24. Nonetheless the company managed to beat some analysts’ expectations.

The size of the loss was mainly due to restructuring charges with more expected to come in 4Q24.

Most of the charges in 3Q24 were nominal ones set against goodwill depreciation or write-downs against deferred tax assets and did not affect Intel’s cash position. The only cash-impacting charge was one of US$2.2 billion associated with the severance of approximately 15 percent of the company’s staff.

CFO David Zinsner said: “We expect the principal cash cost associated with the restructuring charges to land in 4Q24. We have $24.1 billion of cash and short-term investments, paid down $2.8 billion of debt in the quarter and remain focused on de-levering next year as cash from operations continues to improve.”

The sales outlook for 4Q24 was given as between US$13.3 billion and US$14.3 billion. This would be a sequential rise of 3.8 percent but a 10.4 percent fall on an annual basis.

Declining sales

Intel’s 3Q24 sales were down 6 percent on the same quarter a year before with declines across many of its product business units and at subsidiaries such as Altera and Mobileye.

FPGA vendor Altera’s sales were down 44 percent compared with 3Q23 and automotive processor Mobileye’s were down 8 percent. In Mobileye’s case this was ascribed to a loss of sales into the Chinese market during a conference call with analysts to discuss the results.

The sales outlook for 4Q24 was given as between US$13.3 billion and US$14.3 billion. This would be a sequential rise of 3.8 percent but a 10.4 percent fall on an annual basis. CFO David Zinsner

Intel reported that Intel Foundry, the operation that covers manufacturing operations, had sales of US$4.4 billion, down 8 percent compared with a year before. Almost all of these sales are internal. Intel has spoken about picking up customers for its 18A manufacturing process – such as Amazon Web Services – but these wins are not set generate revenue until 2025 and 2026.

In the conference call CEO Pat Gelsinger stated that 18A “is healthy and continues to progress well.” He added that Intel’s Panther Lake, and Clearwater Forest, are the lead vehicles for 18A. These chips have met development milestones and are set to launch in 2025, he said.

However, Zinsner also offered cautionary words. While Intel is planning for 3 to 5 percent revenue increase in 2025 Zinsner said that gross margin expansion “could be muted,” particularly in the 2H25.

“We expect gross margin fall-through to significantly improve in 2026, driven by the vastly improved cost structure of Intel 18A, the return of tiles to a meaningfully underutilized Intel Foundry and operational efficiencies,” he said.