Recently, Intel announced its financial results and they were surprisingly bad. The company posted a $700 million defecit! While Intel remained profitable last year, it said its profits would continue to fall this quarter.
Intel will lose more next quarter
The last quarter of 2022 didn’t look good for Intel, revenue decreased to $14 billion, thats a 32% minus compared to the same quarter in 2021. They made even less gross margin, which is down 50%! It is the lowest record in years, maybe even decades! The company also lost $664 million this quarter, which is nearly the largest quarterly loss the company has ever made.
Intel posts massive decline
The results for the full year don’t look good either: Intel’s revenue was $63.1 billion last year, down 20% year-over-year, and margin fell to 42.6%, while net income slumped to $8 billion, down 60% year-over-year. Intel said the results aren’t good and put emphasis to the fact they are working on reaching strategic goals, even though they face big challenges.
pic.: Intels bottom line looks bad
They said they have to adjust how they spend money and especially their operating costs. This might mean they have to fire some people too. One of the biggest parts of the company is their Client Computing Group, which made roughly $4 billion less last quarter. Even though it was still profitable and made $700 million revenue.
What are the reasons for the decline?
One of the main reasonst is the low demand in PC components in the “normal” sectors, consumer and education. Another factor is the reduction in PC OEM inventory. With a 36% lower sale on CPU and chipsets last year, it’s a combination of lower prices and lower volume, basically everything went down.
pic.: Client Computing didn’t help much last quarter
To top that off, products in the Intel 7 manufacturing process line are expensive to produce which makes it harder to make profit. Revenue for the data center and AI group fell to $4.3 billion compared to $6.4 billion a year earlier, while profitability slumped to $0.4 billion, that’s $2 billion less than last quarter!
AMD to blame?
AMD definitely is also to blame, because they put the heat on Intel, their server hardware is more in demand and makes it hard for Intel to turn a profit. The delay of Intel’s Xeon Scalable ‘Sapphire Rapids’ CPUs was a hard blow to them as AMD is constantly keeping the edge in the sector and lowering the revenue of Intels new tech-launch. This is a huge part of the lower income because Intels server tech brings in twice as much money because consumer-grade PC hardware is sold at a lower margin. Of course the ongoing world wide crisis and many hotspots, afterburns from COVID and other conflicts around the world play a role in Intels bad numbers. We will have to see how they react to their lower income.