Intel puts on a brave face as data centre revenue plummets
Intel has seen a further drop in its business, down 14% in 2023 to $54.2bn as customers used their inventory.
The results come after years of losses and falling profits. Intel invested $16.0bn in R&D, made capital investments of $25.8 billion, and had $11.5 billion in cash from operations. Full year profits of $1.7bn were down 79% from 2002.
Despite all the hype over AI, Intel’s data centre and AI revenue decreased 20% due to lower server volume resulting from a softening CPU data centre market. This was partially offset by higher ASPs from a lower mix of hyperscale customer-related revenue and a higher mix of high core count products.
Intel says it remains on track to meet its goal of achieving five nodes in four years and regain transistor performance and power performance leadership by 2025, and Intel 3 became Intel’s first advanced node offered to its foundry customers.
It began installation of the industry’s first on-site High-NA EUV tool in Oregon to address the challenges beyond Intel 18A.
The billion dollar Intel Foundry Service (IFS) also won a key design award with a new high-performance computing customer, its fourth external Intel 18A customer win in 2023. IFS has taped out more than 75 ecosystem and customers test chips and has more than 50 test chips in the pipeline across 2024 and 2025, 75% of which are on Intel 18A.
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Intel also won three additional advanced packaging design wins during the fourth quarter and announced a collaboration with UMC on the development of a 12-nanometer process platform to address high-growth markets, such as mobile, communication infrastructure and networking.
Revenue in the consumer group decreased 8% due to lower notebook and desktop volume from lower demand across market segments, partially offset by increased volume in the second half of the year as customer inventory levels normalized compared to higher levels in the first half.
Notebook ASPs decreased due to a higher mix of small core products combined with a higher mix of older generation products. This was partially offset by higher desktop ASPs due to an increased mix of product sales to the commercial and gaming market segments.
Networking revenue decreased 31% as customers tempered purchases to reduce inventories and adjust to a lower demand environment across product lines.
The spun off Mobileye business delivered $2.1bn for the full year, up 11%, while Intel Foundry Services doubled its revenue to $952m.
“We delivered strong Q4 results, surpassing expectations for the fourth consecutive quarter with revenue at the higher end of our guidance,” said Pat Gelsinger, Intel CEO. “The quarter capped a year of tremendous progress on Intel’s transformation, where we consistently drove execution and accelerated innovation, resulting in strong customer momentum for our products. In 2024, we remain relentlessly focused on achieving process and product leadership, continuing to build our external foundry business and at-scale global manufacturing, and executing our mission to bring AI everywhere as we drive long-term value for stakeholders.”
“We continued to drive operational efficiencies in the fourth quarter, and comfortably achieved our commitment to deliver $3 billion in cost savings in 2023,” said David Zinsner, Intel CFO.
“We expect to unlock further efficiencies in 2024 and beyond as we implement our new internal foundry model, which is designed to drive greater transparency and accountability and higher returns on our owners’ capital.”
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