Intel Corp's (NASDAQ:INTC, ETR:INL) latest results landed with a mixture of optimism and hard reality for anyone tracking the future of global chipmakers.
The company reported stronger revenue than expected, but outlined a tough plan to tackle losses and sharpen its strategy as artificial intelligence continues to reshape the sector. Here are the five points to note.
1. Revenue ahead of forecasts, but losses widen
Intel posted revenue of $12.86 billion for the quarter, comfortably beating analyst expectations of $11.92 billion. However, this was not enough to offset widening losses. The company reported a net loss of $2.9 billion, or 67 cents per share, compared with a loss of $1.61 billion, or 38 cents per share, a year earlier. An $800 million impairment charge related to surplus equipment dragged on results. “That resulted in an EPS adjustment of about 20 cents,” Intel said. Adjusted earnings per share were a loss of 10 cents.
2. Sharp cuts as new chief executive takes charge
Chief executive Lip-Bu Tan, who took the helm in March, has moved quickly on cost-cutting. In a memo to staff, Tan said Intel had “completed the majority” of its planned job cuts, reducing headcount by 15% and aiming to end the year with 75,000 employees. The company is targeting $17 billion of savings in operating expenses by 2025. Tan acknowledged that the first few months “had not been easy,” but said these measures were needed to make Intel’s products competitive again.
3. Foundry division remains in the red and spending is reined in
Intel’s foundry unit, which manufactures chips for external clients, posted an operating loss of $3.17 billion on $4.4 billion of revenue. Tan announced that planned factories in Germany and Poland had been cancelled, while testing and assembly operations will be consolidated in Vietnam and Malaysia. Construction of a major new plant in Ohio will be slowed until demand improves and a major customer is secured. “Over the past several years, the company invested too much, too soon – without adequate demand,” Tan wrote.
4. Uneven performance across core businesses
Revenue from the client computing group, which covers central processors for personal computers, slipped 3% to $7.9 billion. Meanwhile, the data centre business, including some artificial intelligence chips, rose 4% to $3.9 billion. The division continues to face stiff competition from Advanced Micro Devices, which is winning market share in servers.
5. Shares remain volatile amid restructuring
Intel’s shares dropped about 5% in after-hours trading. Even with a 13% rise so far this year, the stock is still struggling to recover from a 60% slide in 2024, its worst performance on record. As Intel sets its sights on catching up in artificial intelligence, chief executive Tan has set out a stricter approach: “There are no more blank checks. Every investment must make economic sense.”