Intel facing a historic collapse? Expects first two consecutive quarterly losses in 30 years

　　The Paper reporter Zhou Ling

　　U.S. chip giant Intel stumbled in its fourth-quarter results amid a sharper-than-expected decline in personal computer (PC) chip sales and fierce competition in the lucrative server hardware market.

　　After the U.S. stock market closed on January 26, Intel released its financial report for the fourth quarter and full year of 2022.

The report shows that Intel's fourth-quarter revenue was US$14.042 billion, a decrease of 32% compared with US$20.528 billion in the same period last year; the net loss was US$661 million, compared with a net profit of US$4.623 billion in the same period last year; Excluding certain one-time items (non-GAAP), Intel's fourth-quarter adjusted net income was $400 million, down 92% from $4.7 billion a year earlier.

　　Intel’s performance guidance for the first quarter of 2023 is that revenue will be between US$10.5 billion and US$11.5 billion, which is far lower than the previous market expectation of US$14 billion. Intel also expects to continue to lose money in the first quarter of this year.

Analysts called the guidance a "historic collapse" for Intel that would trigger a sell-off in chip stocks.

　　Facing the disappointing performance, Intel CEO Pat Gelsinger acknowledged that the difficult environment was compounded by excess chip inventory, and that the company's fourth-quarter results and first-quarter guidance were lower than expected. .

　　The "Wall Street Journal" quoted data from S&P Global Market Intelligence as saying that at least in the past 30 years, Intel has not experienced losses in two consecutive quarters.

　　Two of Intel's most important markets weakened after two years of strong growth as remote work boomed during the pandemic.

Now, the PC industry is battling a chip glut after consumer electronics demand slumped and recession-fearing business customers were slowing data center spending.

　　According to the Wall Street Journal, according to research firm Gartner, PC shipments fell 28.5% in the fourth quarter of last year, the worst drop since Gartner began tracking the market in the 1990s.

Intel-made CPUs are standard on most personal computers.

　　Judging from Intel's financial report, Intel's largest cash cow department, Intel Client Computing Group, had a net revenue of US$6.625 billion in the fourth quarter, compared with US$10.333 billion in the same period last year, a year-on-year decrease of 36%, lower than analysts' expectations; Intel's data center and artificial intelligence (AI) group's revenue in the fourth quarter was US$4.304 billion, compared with US$6.426 billion in the same period last year, a year-on-year decrease of 33%.

　　The performance of Intel's foundry business, which Kissinger focused on after returning to Intel, performed well, but its scale was still too small to "save" the company's overall performance.

In the fourth quarter, Intel's foundry service division revenue was $319 million, compared with $245 million in the same period last year, an increase of 30% year-on-year; operating loss was $31 million, compared with the same period last year. The profit was $3 million.

　　At present, the prospect of Intel is quite bleak. Although Intel occupies 70% of the personal PC chip market, the overall personal PC market demand is sluggish, which affects Intel chip shipments.

Secondly, Intel's data center chips do not have an advantage in the competition, and their market share has been losing to competitors such as AMD.

　　Previously, Intel estimated that the total target market for PCs in 2023 would be 270 million to 295 million units.

Intel said on the conference call that it now expects the market to be at the end of that range.

　　Intel plans to cut costs by $3 billion this year, and capital expenditures in 2023 are estimated to be about $20 billion, and some analysts say the company should consider cutting its dividend.

　　In order to cut expenses, Intel also joined the wave of layoffs in Silicon Valley.

Kissinger admitted that recent expenditures are being adjusted to manage costs, layoffs have already started, and relevant positions will continue to be cut in the first half of the year.

　　It is worth noting that Intel is trying to expand its chip manufacturing business and plans to build new factories in the United States and Germany. This is Kissinger's plan to revive Intel. Intel has fallen behind Asian rivals in the race for faster chips.

　　Affected by cost expenditures, Kissinger's plan to promote the construction of Intel chip factories may also be affected.

A few days ago, some media reported that the construction plan of Intel's factory in Germany has been postponed.

According to German media reports, Intel is now seeing a "difficult market situation" and can no longer promise to continue its plan to build a semiconductor factory in Germany in the first half of this year.

Kissinger responded on the conference call that he will maintain long-term strategic investment, which is a long-term development process.

　　As of the close of U.S. stocks on January 27, Intel closed down 6.41% to close at $28.16, with a market value of $116.2 billion.