Intel released some grim numbers in its latest financials, showing big declines in its fourth quarter and full 2022 revenue.
Intel’s Q4 2022 revenue came in at $14.0 billion, down 32% year-over-year, while gross margin was 39.2%, down from 53.6% year-over-year. Full-year revenue clocked in at $63.1 billion, down 20% year-over-year.
As for where the leak is coming from, Intel’s Client Computing Group generated $6.6 billion in revenue (down 36% year-over-year in Q4), while the Data Center and AI division earned $4.3 billion (a down 33%), and the Network and Edge unit scooped up $2.1 billion, a less devastating 1% decline.
Intel shares are reported to have fallen 9.5% in trading following the news. Despite these grim numbers, Intel was keen to put a positive spin on things:
“Despite the economic and market headwinds, we continued to make good progress on our strategic transformation in Q4, including advancing our product roadmap and improving our operational structure and processes to drive efficiency while delivering on the low end of our guided assortment,” said Pat Gelsinger, Intel CEO. “In 2023, we will continue to navigate the near-term challenges while striving to fulfill our long-term commitments, including delivering leadership products anchored on open and secure platforms, powered by production at scale and supercharged by our incredible team.”
It forecasts Q1 2023 revenue of $10.5 billion to $11.5 billion, but declined to make a full-year forecast. In a Q&A during the earnings call, David Zinsner Corporate Vice President, Investor Relations, said: “We’re trying to avoid guiding beyond the first quarter given the obscurity. I would just say that we’re very focused on the appropriate level of investment, that is necessary for the long-term strategy of IDM 2.0, while at the same time we are very careful about how much CapEx we spend on managing our free cash flow.
He later added: “We’re a high-fixed-cost model. So of course we suffer the consequence when revenue is down, but we also get the benefit when revenue is growing. And then what – what is currently a headwind turns into a tailwind as the business recovers.”
As for what’s behind the decline, Reuters reported that CEO Pat Gelsinger told investors on a conference call that the company has been losing market share in the data center market, presumably to AMD. “We stumbled, right, we lost share, we lost momentum. We think it will stabilize this year.”
But many of the US tech giants are struggling at the moment and are scrambling for staff. There are probably a few main factors driving this. The cost of living crisis and general economic gloom experienced last year (which doesn’t seem to be going away anytime soon) affected all manors in sectors and businesses, no matter how big or small.
Tech companies in particular saw something of a boom during the pandemic, however, as people bought devices and services that could make being locked indoors a little more tolerable, and offices around the world suddenly had to distribute themselves to everyone’s homes to continue operating.
Intel supplies the processors for a huge range of devices – and maybe the shutdowns are now over (unless you’re in China), this represents something of a correction for that boom. But for Intel, which in 2022 announced a $30 billion investment with Brookfield to boost its U.S. chipmaking capabilities, it’s a particularly difficult time for such a big drop in revenue.
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