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Restructuring, slowing markets hit Intel results

Restructuring, slowing markets hit Intel results

Business news |
By Nick Flaherty



Intel is seeing a dramatic fall in revenue this year from slowing markets and selling off businesses.

The company is predicting revenue between $65bn and $68bn for 2022, down from $79bn in 2021. Second quarter revenue was $15.3bn, down 22% year over year (YoY), with a loss of $500m.

The fall comes as the PC markets falls, with Intel’s Client Computing and Datacentre and AI Groups largely impacted by continued adverse market conditions. In contrast the Network and Edge Group and Mobileye achieved record quarterly revenue.

The fall in the data centre revenues comes despite a growing market as the operators are shifting to custom chips. The company expanded its partnership with Amazon Web Services to co-develop several new chips based around its Xeon architecture. The company uses AWS internally, including running EDA chip design software for its own chips and foundry customers in the cloud. Intel also expanded its supply agreement with Meta, the owner of Facebook and a major data centre operator.

The company has also sold off six businesses, including the drones used for lightshow activity and commercial monitoring and winding down its ill-fated Optane 3D crosspoint memory business.

“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues,” said Pat Gelsinger, Intel CEO who took over in February 2021. “We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation.”

This comes as the company plans a huge investment in capacity at new sites in Ohio and Germany with significant government support from the US and European Chips Acts. The company expects its Intel 4 4nm process to start volume production later this year and says it is on schedule with the Intel 3, 20A and 18A process technologies. Both Samsung and TSMC are shipping 3nm parts in volume later this year.

Intel previously announced several organizational changes. This includes the reorganization of Intel’s business units to capture growth and provide increased transparency, focus and accountability. As a result, the company modified its segment reporting to align to the previously announced business reorganization.

Key Business Unit Revenue and Trends

 

Q2 2022

 

vs. Q2 2021

Client Computing Group (CCG)

 

$7.7bn

 

down

25%

Datacenter and AI Group (DCAI)

 

$4.6bn

 

down

16%

Network and Edge Group (NEX)

 

$2.3bn

 

up

11%

Accelerated Computing Systems and Graphics Group (AXG)

 

$186m 

 

up

5%

Mobileye

 

$460m 

 

up

41%

Intel Foundry Services (IFS)

 

$122m

 

down

54%

The networking division achieved record revenue and began shipping Mount Evans, a 200G ASIC IPU, which was co-developed and is beginning to ramp with a large hyperscaler. In addition, the Intel Xeon D processor is ramping with leading companies across industries.

The graphics group shipped Intel’s first bitcoin accelerator chip, the Blockscale ASIC, and the Arc A-series GPUs for laptops began shipping with OEMs, including Samsung, Lenovo, Acer, HP and Asus.

www.intel.com

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