Intel disaster

Intel’s financial results for the fourth quarter were a disaster, with a huge decline in revenue and earnings.

The chip manufacturer reported revenue of $14.04 billion, down 32% year-on-year and missing the consensus estimate of $14.45 billion.

It also reported adjusted earnings per share (EPS) of 10 cents compared to the estimated 20 cents per share.

Intel made a net loss of $661 million dollars for the Q4 period – the biggest loss in a quarter since 2017.

Since the beginning of Q1 2022, Intel’s trailing annual net income has been declining and has now hit a particularly low point, with the Q4 annual revenue of $8.02 billion.

Intel CEO Pat Gelsinger said the company had been affected by persistent macroeconomic pressures since Q2 of 2022.

He said that Intel was impacted by significant volatility, and they expect this to continue in the short term.

The company’s poor results set the share price to fall almost 11% in the after-hours of trade, from $30 to $27 per share.

Although a lot of Intel’s pain is self-inflicted, it has also faced headwinds because of challenges outside of its control.

The economic environment has not been favourable toward tech companies, and increased inflation, rising interest rates, and global recession fears have hurt growth.

Region	31-Dec-21	31-Dec-22	Change
China	36%	27%	-25%
Singapore	29%	15%	-47%
USA	23%	26%	+15%
Taiwan	18%	13%	-27%
Other	19%	18%	-6%

Recent US policies have also worked against many US-based chip production companies, including Intel.

The US set in place regulations that limit the export of advanced microchips used in AI applications to China.

It was in response to China’s adoption of civil-military integration to become the most technologically advanced military in the world.

The implication is that advanced microchips sold to China could be used for military purposes without the knowledge of the US.

China is the largest contributor to Intel’s revenue at 36% of its 2021 annual revenue.

For the year ending 31 December 2022, China’s contribution to Intel’s annual revenue decreased from 36% to only 27%. It also saw a significant contraction in Singapore and Taiwan.

The US market is the only geographic region where intel grew its revenue, from $14.3 billion in 2021 to $16.5 billion in 2022.