News Intel Posts $500 Million Loss for the First Time in Decades as Sales Drop 17%

[Admin]

Intel's revenue and margins waterfall in Q2 2022 due to economic slowdown and execution at the company.

Intel Posts $500 Million Loss for the First Time in Decades as Sales Drop 17% : Read more

 

[InvalidError]

Looking forward to seeing how Intel's plans to raise retail prices will square off against sales already receding by 16-25% at current pricing.

This shouldn't be surprising anybody, the ~30% bumper sales from COVID WFH and stimulus handouts were never going to convert into sustained repeat sales. Especially not in the immediate wake of everyone who hadn't semi-recently upgraded rushing to upgrade at the same time, monster inflation on essential goods and a global economic slowdown.

 

[BigD1]

Chips Act just passed at 52 billion. Intel will get lots of that money.

 

[btmedic04]

I'm willing to bet untel is seriously eyeing up its graphics division for the chopping block. Arc is underperformed and super late to the party

 

[escksu]

I'm willing to bet untel is seriously eyeing up its graphics division for the chopping block. Arc is underperformed and super late to the party

Nope it won't. Arc is not the main product of graphics division. Its real product is ponte vecchio.

 

[spongiemaster]

It was just reported in another article that Intel wrote off $559 million in Optane inventory in Q2. All around terrible quarter for Intel. At some point they're going to have to start delivering on all their promises. Where is Sapphire Rapids? Where are the GPU's? Looks like Raptor Lake is on schedule, but that's basically an Alder Lake refresh. The real question is, is Meteor Lake still on schedule which is on a new node?

 

[TerryLaze]

50% tax...
Also they are building new FABs, all of their income is being spend on" Net additions to property, plant and equipment"

 

[KyaraM]

I'm willing to bet untel is seriously eyeing up its graphics division for the chopping block. Arc is underperformed and super late to the party

LMFAO

What are you betting? =)

 

[-Fran-]

I'm suprised this didn't happen before, TBH. Given how their roadmaps have been continuously moving backwards, it's a tad impressive they held on for this long.

Also, funny how Pat sounds a bit more down to earth now after boasting so much when he came along, lol. Still, the rumour mill says he's doing good things inside, so let's hope he'll get to laugh at the end. Just not too much, lel.

Regards.

 

[InvalidError]

I'm willing to bet untel is seriously eyeing up its graphics division for the chopping block. Arc is underperformed and super late to the party

A 500M$ loss on graphics is tiny compared to the billions of dollars Intel pumped into its wireless business and IA64 before giving up. I doubt anyone who's followed tech for the last 20 years had any expectations of Intel getting anywhere near par on its first generation of products attempting to break into a new market. New entrants practically always have to slog it out for 3-5 years before getting any brand recognition and traction assuming there are no show-stopping issues.

From Intel's interview with GN, it sounds like Intel is committed to graphics at least until Drood, so we're likely at least another four years and couple of billion dollars away from Intel quitting graphics again if it doesn't work out.

 

[KyaraM]

A 500M$ loss on graphics is tiny compared to the billions of dollars Intel pumped into its wireless business and IA64 before giving up. I doubt anyone who's followed tech for the last 20 years had any expectations of Intel getting anywhere near par on its first generation of products attempting to break into a new market. New entrants practically always have to slog it out for 3-5 years before getting any brand recognition and traction assuming there are no show-stopping issues.

From Intel's interview with GN, it sounds like Intel is committed to graphics at least until Drood, so we're likely at least another four years and couple of billion dollars away from Intel quitting graphics again if it doesn't work out.

Exactly this. Only morons would expect instant success, even if it is Intel. Just look at how long they dragged around other failed products, should give an indication of how long they are willing to try. Intel-GPUs won't go anywhere anytime soon. Besides, they aren't even that bad. At this point in time, the issue seem to be software, not hardware. The hardware looks great, I mean, it's developed by professionals from the field, and tests showed that with some rather easy and minor tuning (OC A380 testing), they are serious competition at a considerably lower price point especially in DX12 games (the GN interview stated a converted price of 125-135$ for the A3 380). Even the power consumption is set lower than the competition. The cards got potential, they just need to pull their heads out of their butts and get them out already.

However...

Drood

Sorry for nitpicking, but it's Druid

 

[-Fran-]

This is worrying though:

View: https://www.youtube.com/watch?v=DH2s5HeZzs8


Tom has a lot of hard information in there and welp, it's not a pretty message coming from the other people at Intel (reportedly) that are sour with the Graphics Division. I wonder what Pat will do about this XD

Regards.

 

[InvalidError]

Sorry for nitpicking, but it's Druid

I know. At first, I was tempted to "spell" it as Druig instead, though it would suck if it lived up to that name

 

[watzupken]

Chips Act just passed at 52 billion. Intel will get lots of that money.

It’s true that Intel will likely be the biggest beneficiary. But I feel they will run into problem even with the money.
1. You can build a lot of fabs, but fabs don’t magically produce chips. There are lots of factors that can dampen their chip producing effort,

2. when chip demand is Low and expected to be so high inflation and recession, these fabs may not be running at full capacity even if they are ready.

 

[jp7189]

Nope it won't. Arc is not the main product of graphics division. Its real product is ponte vecchio.

Ponte vecchio is also late with performance unconfirmed. Bitcoin miners are the only thing that group has produced that met expectations.

 

[jp7189]

Exactly this. Only morons would expect instant success, even if it is Intel. Just look at how long they dragged around other failed products, should give an indication of how long they are willing to try. Intel-GPUs won't go anywhere anytime soon. Besides, they aren't even that bad. At this point in time, the issue seem to be software, not hardware. The hardware looks great, I mean, it's developed by professionals from the field, and tests showed that with some rather easy and minor tuning (OC A380 testing), they are serious competition at a considerably lower price point especially in DX12 games (the GN interview stated a converted price of 125-135$ for the A3 380). Even the power consumption is set lower than the competition. The cards got potential, they just need to pull their heads out of their butts and get them out already.

However...

Sorry for nitpicking, but it's Druid

I agree no one should have expected instant success, but they aren't doing a good job of setting and meeting goals and expectations, and that in turn causes a loss of trust and good will. That is very dangerous. However, the thing that will get the bean counters most upset is poor margins, and it doesn't look like the Arc line has any hope of decent margins for a very, very long time. As for ponte vecchio, time will tell.

 

[btmedic04]

This is worrying though:

View: https://www.youtube.com/watch?v=DH2s5HeZzs8


Tom has a lot of hard information in there and welp, it's not a pretty message coming from the other people at Intel (reportedly) that are sour with the Graphics Division. I wonder what Pat will do about this XD

Regards.

This is exactly what I was hinting at. MLID video was concerning, that's why I placed my bet lol. I hope they don't scrap it, but if the info is true, arc has an uphill battle internally

 

[InvalidError]

I agree no one should have expected instant success, but they aren't doing a good job of setting and meeting goals and expectations, and that in turn causes a loss of trust and good will. That is very dangerous.

Nah, that is how it should be. Intel tried to jump in the GPU arena with unrealistic goals and time tables hoping to cash in on the crypto GPU boom, now they get punished for setting unrealistic targets for a first-gen product and failing to deliver on time. Thanks to this, Intel will be forced to sell cheap-as-chips GPUs to gain market share.

Not much different from how AMD's Zen was grossly underwhelming and messy, Zen+ got much better and Zen 2 mostly completed AMD's reputation rehab.

I always expected Alchemist to be kind of sacrificial, albeit not to the point of possibly getting scrapped.

 

[Jimbojan]

I don't believe Intel will ever quit graphic development and shed market share, as it is increasingly important to the CPU sale; that is, it is a package deal in PC, server and wireless systems.

 

[waltc3]

Always, when one company is beating another in sales and market share fairly significantly, it takes several quarters to work through all of the bookkeeping tricks like good will and in-channel orders a company will use to create decent quarterly reports to disguise poor sales, and if by that time the losing company has not been able to recover, then the real picture of its sales and market share begins to emerge when good-will and in-channel orders & inventories have been worked through in the quarterly statements. And that's what we're seeing with Intel right now. This decline began many quarters back, and Intel has failed to recover, and so the detrimental results can no longer be padded. I've seen it happen before in cases of very competitive companies not even related to the computer biz.

 

[jp7189]

I don't believe Intel will ever quit graphic development and shed market share, as it is increasingly important to the CPU sale; that is, it is a package deal in PC, server and wireless systems.

This is especially true in the datacenter. Perhaps the question to ask is can nvidia make a competitive CPU before Intel can make a competitive GPU.

 

[InvalidError]

This is especially true in the datacenter. Perhaps the question to ask is can nvidia make a competitive CPU before Intel can make a competitive GPU.

Amazon, Google and likely others are cooking up their own in-house accelerators too.

 

[KyaraM]

Always, when one company is beating another in sales and market share fairly significantly, it takes several quarters to work through all of the bookkeeping tricks like good will and in-channel orders a company will use to create decent quarterly reports to disguise poor sales, and if by that time the losing company has not been able to recover, then the real picture of its sales and market share begins to emerge when good-will and in-channel orders & inventories have been worked through in the quarterly statements. And that's what we're seeing with Intel right now. This decline began many quarters back, and Intel has failed to recover, and so the detrimental results can no longer be padded. I've seen it happen before in cases of very competitive companies not even related to the computer biz.

Uhm. You are aware that Intel still holds over 60% of the CPU market share, yes?
https://www.cpubenchmark.net/market_share.html

Sales might be a somewhat different story, but I wouldn't hold my breath about AMD doing significantly better this quarter.

 

[spongiemaster]

Uhm. You are aware that Intel still holds over 60% of the CPU market share, yes?
https://www.cpubenchmark.net/market_share.html

Sales might be a somewhat different story, but I wouldn't hold my breath about AMD doing significantly better this quarter.

Intel's lead is quite a bit higher than that. AMD set an x86 market share record for themselves of 27.7% in Q1 of this year. That puts Intel at over 70% market share. x86 market includes the millions of CPU's AMD sells to MS and Sony for their consoles, so Intel has an even more commanding lead in the computer market. AMD is selling pretty much everything they produce and their market share is under 30%. TSMC doesn't have the available capacity to get AMD anywhere near 50% market share. People aren't grasping how big a company Intel is and their market dominance even in down times.

 

[waltc3]

Uhm. You are aware that Intel still holds over 60% of the CPU market share, yes?
https://www.cpubenchmark.net/market_share.html

Sales might be a somewhat different story, but I wouldn't hold my breath about AMD doing significantly better this quarter.

Irrelevant. Intel has been leaking share steadily for years like a sieve. At a time when AMD's CPU profits are soaring, Intel is losing money in its CPU division. Should this continue for another few years, Intel will become an historical footnote. I would bet AMD does in fact do "significantly better" this quarter.

There is absolutely no mystery about any of this. Intel is simply not a company geared and structured internally for continuous competition. Gelsinger and crew hail from the time when Intel was a CPU monopolist and could get away with paying companies not to sell AMD products or any other competitor's products. They paid Dell huge sums for years not to sell AMD products, for instance, hoping to run AMD out of business as they did every other would-be CPU competitor. The entire time AMD was burning the midnight oil and spending a tenth of Intel's R&D budget, Intel was asleep, raking in the dough and under no hurry to do much of anything. The cultures between the two companies are radically different. AMD executes perfectly, whereas Intel cannot tie its shoes on time these days. Intel's ultimate fate is far from assured, imo. It's a race, and may the best company win. I don't think Gelsinger has a clue, frankly. It was just a few months ago, when he said, "Now that I've put AMD in the rear-view mirror..." The joke in the industry was that Gelsinger was driving backwards... The situation reminds me of the disclaimer on a stock prospectus: "Past performance is no guarantee of future profitability".