According to reports, the US chip giant Intel announced its second-quarter financial report today. Because the quarterly and full-year performance outlook fell short of Wall Street analysts’ expectations, Intel’s stock price was in after-hours trading in the US stock market. plunged 10% (later narrowed to 8.5%).
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Income plummeted by 20%
According to the financial report, in the quarter ended July 2, Intel’s revenue fell 22% year-on-year. According to the financial data company Revinitiv, Intel’s second-quarter revenue fell 14 percentage points away from analysts’ expectations, the company’s largest quarterly performance gap since 1999.
In the second quarter, Intel posted a net loss of $454 million, compared with a net profit of $5 billion in the second quarter of last year. In terms of gross profit margin, Intel dropped from 50.4% in the first quarter to 36.5% in the second quarter.
On the earnings analyst conference call, Intel CEO Pat Gelsinger said that the company’s second-quarter performance decline was primarily due to a sudden and sharp decline in macroeconomic activity, with other companies also The reason is related to product design and the production capacity improvement of AXG (Accelerated Computing System and Graphics Chip Group) chips.
Kissinger also mentioned that Intel continues to experience supply chain tensions related to the new crown epidemic, delaying some chip production plans.
Awkward performance outlook
For the current third quarter, Intel’s outlook includes operating income of $15 billion to $16 billion and an adjusted profit of 35 cents per share. For comparison, in an analyst poll, Wall Street expected operating income of $18.62 billion and earnings per share of 86 cents.
In addition, Intel lowered its 2022 performance outlook. Full-year revenue is expected to be $65 billion to $68 billion and earnings per share of $2.30. Three months ago, Intel’s full-year outlook was for a profit of $3.60 per share on revenue of $76 billion. For comparison, Wall Street analysts expect Intel to report $74.3 billion in revenue this year and a profit of $3.42 per share.
Intel Chief Financial Officer David Zinsner said that in the second quarter, small and medium-sized enterprises around the world reduced their purchases of computer equipment, but demand from large enterprises remained strong. However, the future forecast for the US macro economy is weaker, which will cause business users to delay the cycle of upgrading computer equipment.
Zinsner said that the company’s management judged that it is currently in a business trough. However, in the fourth quarter of this year, Intel’s planned chip price increase plan and seasonal demand (the Christmas shopping season) will bring Intel’s gross profit margin back to 51% to 53%.
Performance of each sector
Intel’s main product is the computer processor. In the second quarter, the “client computing group,” which includes computer chips, posted revenue of $7.7 billion, a quarter-on-year decline and well below Wall Street analysts’ expectations of $8.89 billion.
Earlier this month, technology market research firm Gartner said the global PC market plunged 13% in the second quarter. In a presentation to investors, Intel said weak computer demand in the consumer and education markets in the second quarter, and higher operating costs impacted the operating profit of the Client Computing Group.
Intel later established a new group, the “Data Center and AI Group”, which includes server chips, memory chips, “field programmable gate arrays” and other products. In the second quarter, the group achieved revenue of $4.6 billion, down 16% year-on-year, far below analysts’ expectations of $6.19 billion.
Intel said that pressure from competitors affected the group’s revenue. Production of next-generation server chips, code-named “Sapphire Rapids”, is expected to rise next year, which is a boon for the group, Zinsner said.
Another newly formed group of Intel is the “Network and Edge Computing Group”, which mainly includes network equipment. The group earned $2.3 billion in revenue in the second quarter, up 11 percent from a year earlier and slightly above Wall Street analysts’ expectations of $2.27 billion.
Ushering in favorable US policy
In the second quarter, Intel launched an artificial intelligence training chip called “Habana Gaudi2”, which competed with Nvidia’s A100 graphics processor for the market. In addition, Intel is also calling on the U.S. Congress to pass legislation to support semiconductor production in the United States, so that Intel can move forward with the project of a new chip factory in Ohio.
On Tuesday, the US House of Representatives passed the “Chip and Science Act” and submitted it to US President Joe Biden for signature. Intel Kissinger commented that this is a historic law. The company expects to receive government funding related to the law next year, Zinsner said at an analyst conference.
In an interview, Zinsner reiterated Intel’s previously announced roadmap that next year, the company will launch a new generation of computer processors code-named “Meteor Lake.” Taiwanese media reported that the chip will ship in the second half of next year, but Zinsner did not discuss a specific timetable.
He said the company wants to launch the Meteor Lake processor as soon as possible and to be honest, Intel is making steady progress on this chip.
Autonomous driving subsidiary goes public
At the analyst meeting, Kissinger also disclosed that the company is preparing to spin off the autonomous driving sub-business Mobileye, but the specific time will be determined by the capital market.
At the meeting, Zinsner also said that taking into account the macroeconomy, Intel will slow down the pace of social recruitment. In addition, capital expenditures for this year are expected to be $23 billion, down from the original forecast of $27 billion.
Excluding Thursday’s after-hours losses, Intel’s stock has fallen 23% this year, compared with a 15% drop for the S&P 500 over the same period.
