Thursday, July 28th 2022
Intel Reports Second-Quarter 2022 Financial Results. First Net Loss in Decades
Intel Corporation today reported second-quarter 2022 financial results. "This quarter's results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues," said Pat Gelsinger, Intel CEO. "We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation."
"We are taking necessary actions to manage through the current environment, including accelerating the deployment of our smart capital strategy, while reiterating our prior full-year adjusted free cash flow guidance and returning gross margins to our target range by the fourth quarter," said David Zinsner, Intel CFO. "We remain fully committed to our business strategy, the long-term financial model communicated at our investor meeting and a strong and growing dividend."
Business Unit Summary
Intel previously announced several organizational changes to accelerate its execution and innovation by allowing it to capture growth in both large traditional markets and high-growth emerging markets. This includes the reorganization of Intel's business units to capture this growth and provide increased transparency, focus and accountability. As a result, the company modified its segment reporting to align to the previously announced business reorganization. All prior-period segment data has been retrospectively adjusted to reflect the way the company internally manages and monitors operating segment performance starting in fiscal year 2022.
Business Highlights
Intel's guidance for the third quarter and full year includes both GAAP and non-GAAP estimates. Reconciliations between GAAP and non-GAAP financial measures are included below.
"We are taking necessary actions to manage through the current environment, including accelerating the deployment of our smart capital strategy, while reiterating our prior full-year adjusted free cash flow guidance and returning gross margins to our target range by the fourth quarter," said David Zinsner, Intel CFO. "We remain fully committed to our business strategy, the long-term financial model communicated at our investor meeting and a strong and growing dividend."
Intel previously announced several organizational changes to accelerate its execution and innovation by allowing it to capture growth in both large traditional markets and high-growth emerging markets. This includes the reorganization of Intel's business units to capture this growth and provide increased transparency, focus and accountability. As a result, the company modified its segment reporting to align to the previously announced business reorganization. All prior-period segment data has been retrospectively adjusted to reflect the way the company internally manages and monitors operating segment performance starting in fiscal year 2022.
Business Highlights
- Intel made significant progress during the quarter on the ramp of Intel 7, now shipping in aggregate over 35 million units. The company expects Intel 4 to be ready for volume production in the second half of this year and is at or ahead of schedule for Intel 3, 20A and 18A.
- IFS recently announced a strategic partnership with MediaTek to manufacture chips for a range of smart edge devices using Intel process technologies. During the quarter, Intel also launched the IFS Cloud Alliance, the next phase of its accelerator ecosystem program that will enable secure design environments in the cloud.
- In the second quarter, CCG launched the 12th generation Intel Core HX processors, the final products in Intel's Alder Lake family, which is now powering more than 525 designs.
- In DCAI, Intel expanded its supply agreement with Meta, leveraging its IDM advantage so that Meta can meet its expanding compute needs. In the quarter, Intel agreed to expand its partnership with AWS to include the co-development of multi-generational data center solutions optimized for AWS infrastructure, and Intel as a strategic customer for internal workloads, including EDA. Intel expects these custom Intel Xeon solutions will bring greater levels of differentiation and a durable TCO advantage to AWS and its customers, including Intel. In addition, NVIDIA announced its selection of Sapphire Rapids for use in its new DGX-H100, which will couple Sapphire Rapids with NVIDIA's Hopper GPUs to deliver unprecedented AI performance.
- NEX achieved record revenue and began shipping Mount Evans, a 200G ASIC IPU, which was co-developed and is beginning to ramp with a large hyperscaler. In addition, the Intel Xeon D processor is ramping with leading companies across industries.
- AXG shipped Intel's first Intel Blockscale ASIC, and the Intel Arc A-series GPUs for laptops began shipping with OEMs, including Samsung, Lenovo, Acer, HP and ASUS.
- Mobileye achieved record revenue in the quarter with first half 2022 design wins generating 37 million units of projected future business.
Intel's guidance for the third quarter and full year includes both GAAP and non-GAAP estimates. Reconciliations between GAAP and non-GAAP financial measures are included below.
27 Comments on Intel Reports Second-Quarter 2022 Financial Results. First Net Loss in Decades
I think the record gouging profits might be winding down. Might want to give wallstreet profit predictions that are 2 years pre-covid. Probably won’t miss such high targets then.
Please dont start with the 10nm and higher performance, 12900k is 60mm^2 smaller than 11900k and when you remove the toy cores the real cores take even less die space
Intel needs to start making money again and considering they practically own OEMs and also AMD and TSMC, no matter what, they can't cover up demand, Intel increasing pricing is something that consumers wouldn't be able to avoid. Soon we will see Ryzen prices jump as they did after 5000 announcement. AMD is not a charity, they will price their products based on Intel's price hikes. Even if they where charity, again, they can't cover up demand. Nvidia, after the crypto collapse, also needs higher margins, so I also doubt they have any intentions in throwing cheaper stuff in the market. So, computing could became much more expensive in the next 2-3 years with companies having inflation to blame. 10% inflation, 20-30% price hikes everywhere. Maths that companies love.
So it's ironic and I hope I am looking it from a .... drunk perspective, but while in a healthy environment Intel's hitting a wall hard could be good for competition, under current conditions this could end up bad for the consumers.
Also the US should've made some law capping executive compensations above a limit with anyone taking these subsidies, but then again the politicians & greedy executives/lobbyists must have their cut!
In the last table, the anticipated Q3 tax rate is listed as (17)%. Does that mean minus 17 percent? I wouldn't be exactly surprised.
"Intel Reports Second-Quarter 2022 Financial Results. First Net Loss in Decades"
Yeah, no they didn't. I'll give you that they're rare, but Intel posted quarterly loss last time in Q4/17, not decades ago. Before that last time was Q2/09.Intel CEO Patrick Gelsinger got around 178 million dollars in his compensation package last year.
ARC is delayed. Ponte Vecchio is delayed. Sapphire rapids is delayed. Optane is dead.
They can only survive thru government subsidies. Intel should pivot to a fab for hire only company and stop wasting our time with crappy and delayed products.
edit: Adding insult to injury
www.macrumors.com/2022/07/29/tsmc-celebrates-arizona-factory/
PS. Intel didn’t delay the Ohio fab because the CHIPS act was delayed. They don’t actually have the money. Lol! Arc cancellation rumors is the cherry on top of this steaming pile of a company.
Think about what you just said.
www.techpowerup.com/293173/nvidia-unveils-grace-cpu-superchip-with-144-cores-and-1-tb-s-bandwidth
Say what you will about intel, good, bad, or otherwise, but blaming anyone and/or anything except themselves for this situation won't solve anything..
Fix it or DIE !
Only 15 years ago and earlier the entire internet connected device market was desktops and laptops dominated by Wintel. Servers were all Intel processors. Enter the smartphone and things changed overnight. Only MS pivoted to a services company (not before almost losing its shirt by trying to compete in mobile) while Intel hunkered down.
Now servers are dominated by several players and CPUs are being replaced by GPUs in the HPC space. AMD, Nvidia, Arm licensees, Risc-V startups and many more are growing in an ever crowded and changing market.
I know what I said and I read the tea leaves of the greater Total Addressable Market (TAM) of which Intel admitted in their earnings call to be losing share. Even gaming might go into the cloud allowing all companies to compete against desktop discrete graphics and processors.
Your L33T build on your desk at home barely registers in the fight over tech. Intel is losing that fight as dozens of players fill the void and compete competently. I for one will not miss ‘a too big to fail’ Intel as they transition from THE chip company to A chip company.
Market cap may be below AMD, but Intel is still much bigger than AMD and while AMD is trading at 30x it's earnings, Intel got as low as 6.5 with this latest results and still offers a fat 4% dividend.
www.phoronix.com/review/graviton3-amd-intel
www.tomshardware.com/news/alibaba-unveils-128-core-server-cpu
www.tomshardware.com/news/gigabyte-unveils-2p-ampere-motherboard-256-cores-per-box
www.techpowerup.com/293173/nvidia-unveils-grace-cpu-superchip-with-144-cores-and-1-tb-s-bandwidth
The first one is the biggest 1000 pound gorilla in the cloud space, the second one is the biggest(?) cloud provider in China & finally there's Nvidia (& Ampere) ~ ARM in the sever space is not yesterday's news! What happened with Apple & Intel will repeat in the server space as well. Anyone thinking otherwise just doesn't understand the tectonic shifts already in place right now.