It is beginning to look like chip maker Intel hit the bottom in its products and foundry businesses in the second quarter of this year and that revenu

Intel Takes The Big Restructuring Hits As It Looks Ahead

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2024-11-01 11:30:05

It is beginning to look like chip maker Intel hit the bottom in its products and foundry businesses in the second quarter of this year and that revenues are slowly – we won’t go so far as to say surely – improving. But now the restructuring charges and cost cutting is going to start to bite and the bottom line will look a little ugly for a while.

Then, Intel will run out of excuses, and hopefully in time for its 18A manufacturing process to catch a little fire among others designing chips for myriad purposes and for 18A processes to be brought to bear on Intel homegrown client and server products. In other words, 2025 should be a hell of a lot better than the misery that 2023 and 2024 was.

“Operationally, Q3 results exceeded our expectations as we achieved key milestones across Intel Foundry and Intel Products,” explained Intel chief executive officer Pat Gelsinger on a call with Wall Street analysts going over the numbers. “Underlying trends in the business are improving at a measured pace and our outlook for Q4 is modestly above current consensus. Overall, our stepped up focus on efficiency and execution across business is having a positive impact. We have a lot more ahead and we are acting with urgency to deliver on our priorities. We need to fight for every inch and execute better than ever before, and our teams are embracing this mindset as we build a leaner, more profitable Intel.”

In the quarter, Intel had revenues of $13.28 billion, down 6.2 percent year on year, and posted an operating loss across all of its groups and units of $4.6 billion, a stark contrast to the $8 million loss Intel had in the year ago period. And adding in another $5.62 billion in restructuring and other charges – a lot of this relating to laying off more than 15 percent of the Intel workforce ($2.2 billion), goodwill impairments for the Mobileye unit ($2.6 billion), and also writing down investments in gear used to make chips with the Intel 7 process ($3 billion), which etches at a 10 nanometer-ish geometries and which cannot be moved forward to support extreme ultraviolet lithography at smaller transistor geometries. Oddly, Intel also booked a $7.9 billion provision for taxes, pushing the company to a mind-numbing net loss of just a tad under $17 billion.

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