Intel will not emerge from the crisis. The American semiconductor group reported another dramatic drop in sales on Thursday after the stock market closed, and there was also a loss of billions. The company is also cautious about the coming quarter. After all, Intel did a little better with its numbers than analysts had feared. The share price was initially slightly up in after-hours trading, but then slipped into the red.
The weak numbers again raise questions about the multi-billion dollar investments that Intel has announced on both sides of the Atlantic. Two chip factories are to be built in Magdeburg, which are said to cost 17 billion euros, with Intel relying on extensive government subsidies. New chip plants are also being built on the American home market. So far, Intel CEO Pat Gelsinger has said he wants to stick to such strategic investments despite the difficult financial situation.
Sales declines of more than 35 percent
In the first quarter, Intel’s sales fell 36 percent year-on-year to $11.7 billion. That was even worse than the development in the final quarter of 2022, when there was a minus of 32 percent. Intel posted a net loss of $2.8 billion, up from a profit a year ago.
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Intel suffered revenue declines of more than 35 percent in both of its major divisions. With chips for personal computers, the group is feeling the weakening of the market. After rapid growth amid the pandemic, far fewer PCs are now being sold. The market for semiconductors for network computers (servers) has also weakened. However, Intel is also suffering from increased competition from its competitor Advanced Micro Devices (AMD) and made mistakes in the development of new products, which led to delays.
For the second quarter, Intel predicts sales of $11.5 billion to $12.5 billion. That would correspond to a minus of up to 25 percent. The target from the previous year is not too high, even then there was a drop in sales of 22 percent.
Intel has announced an austerity program that aims to reduce annual costs by $3 billion in the short term, with savings of up to $10 billion being targeted by 2025. Layoffs should also contribute to this, although Intel has not specified the number. The group also cut its dividend significantly.
