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Intel Now Operating On A Net Loss, $1.61 Billion In The Red

Nelly

Nelly

Nelly

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How sad, as most men will know . . . . what goes up, must come down. :( :( :(

TechPowerUP | Posted on Friday said:
Report: Intel Could Spin Out Foundry Business or Cancel Some Expansion Plans to Control Losses

According to a recent report from Bloomberg, Intel is in talks with investment banks about a possible spin-out of its foundry business, as well as scraping some existing expansion plans to cut losses. As the report highlights, sources close to Intel noted that the company is exploring various ways to deal with the recent Q2 2024 earnings report. While Intel's revenues are in decline, they are still high. However, the profitability of running its business has declined so much that the company is now operating on a net loss, with an astonishing $1.61 billion in the red. CEO Pat Gelsinger is now exploring various ways to control these losses and make the 56-year-old giant profitable again. Goldman Sachs and Morgan Stanley are reportedly advising Intel about its future moves regarding the foundry business and overall operations.

The Intel Foundry unit represents the biggest consumer of the company's funds, as the expansion plans across the US and Europe are costing Intel billions of US Dollars. Even though the company receives various state subsidies to build semiconductor manufacturing facilities, it still has to put much of its capital to work. Given that the company is running tight on funds, some of these expansion plans that are not business-critical may get scraped. Additionally, running the foundry business is also turning out to be rather costly, with Q2 2024 recording a negative 65.5% operating margin. Separating Intel Product and Intel Foundry may be an option, or even selling the foundry business as a whole is on the table. Whatever happens next is yet to be cleared up. During the Deutsche Bank Technology Conference on Thursday, Pat Gelsinger also noted that "It's been a difficult few weeks" for Intel, with many employees getting laid off to try to establish new cost-saving measures.
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Source: https://www.techpowerup.com/326104/...cancel-some-expansion-plans-to-control-losses
 
It's a challenging time for them, they also can't afford to put their foot on the brakes. As soon as they stop innovating, the competition will just overtake and it'll be hard to claw back.

I'd also be a bit worried working for Intel right now. Staffing costs are one quick way to bring spending under control, so I can see them looking at getting rid of any unnecessary roles.
 
And the stock price is up nearly 10% today, I'll never understand stocks.

I do wonder if someone like nvidia would look to buy them when they are at rock bottom, they must have so much IP not to mention the x68 licence
 
malachi said:
Lets be honest, Intel isn't going anywhere regardless of the loss.

They wont end up like Cyrix.
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Yes, certainly too big to fail.
And just look at server sales; for years Zen has outperformed them often while being far far more efficient. Yet Intel continue to command a huge marketshare. Admittedly recently they have made no profit on DC so basically giving special deals to large costumers and giving their server chips away.

If server CPUs were sold more on technical merit it would be 80:20 the other way.

And look at the comments from @RSR in the other thread:

Intel has a Pretty Big Problem..

These are the people who matter most, and its not looking good. These people are starting to wonder if Intel will even be around in 5 years.... When you say these people matter the most, do you mean DC's? If so I can provide some insight, as I work in that industry and I am currently in...
forums.overclockers.co.uk forums.overclockers.co.uk

For going what they are familiar with and being able to swap VMs easily since big DC clients are still willing to sacrifice up to double the perf/watt. Although Sapphire Rapids is the most competitive Intel server part in years - no idea about yields or margins though.


CAT-THE-FIFTH said:
So like AMD and Nvidia will they go fabless and spin off the fab part of the company?
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The "real men have [own] fabs" continues to cloud judgment. Like AMD before them, Intel should have sold off or split years ago like when 14nm was very profitable etc.

I know a lot of new posters on various forums who post like new shareholders and talk up Intel's upcoming nodes. I tend to ignore them, but just because Intel fabrication have cried wolf for so many years now, does not automatically mean that Intel 18A could not be good. Spinning of the fabs when they have a good node would be a lot easier than currently.
 
KompuKare said:
Yes, certainly too big to fail.
And just look at server sales; for years Zen has outperformed them often while being far far more efficient. Yet Intel continue to command a huge marketshare. Admittedly recently they have made no profit on DC so basically giving special deals to large costumers and giving their server chips away.

If server CPUs were sold more on technical merit it would be 80:20 the other way.

And look at the comments from @RSR in the other thread:

Intel has a Pretty Big Problem..

These are the people who matter most, and its not looking good. These people are starting to wonder if Intel will even be around in 5 years.... When you say these people matter the most, do you mean DC's? If so I can provide some insight, as I work in that industry and I am currently in...
forums.overclockers.co.uk forums.overclockers.co.uk

For going what they are familiar with and being able to swap VMs easily since big DC clients are still willing to sacrifice up to double the perf/watt. Although Sapphire Rapids is the most competitive Intel server part in years - no idea about yields or margins though.
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I assume from your comments, you think its easy to jump ship and change platform? While I am not trying to isolate that comment, I am just wondering if you have any idea how long it takes to test, validate a platform so it can be productised and sold. There is also more than just hosts (Servers) which also use Intel CPU's in the chain and as of yet, I have not seen any AMD offerings yet from a large vendor.
 
Whats that saying - the wolf on top of the hill isn't as hungry as the one climbing it? What ever it is, Intel got lazy and they are now paying for it. No doubt they can afford a comeback but I do find it pretty incredible how the tide has turned over the years
 
RSR said:
I assume from your comments, you think its easy to jump ship and change platform? While I am not trying to isolate that comment, I am just wondering if you have any idea how long it takes to test, validate a platform so it can be productised and sold. There is also more than just hosts (Servers) which also use Intel CPU's in the chain and as of yet, I have not seen any AMD offerings yet from a large vendor.
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No, I've never done at anything remotely that scale, or even read about it.

But things move very glacially. What you're involved with sounds huge but there must be even bigger hyperscalers who write their own software if need be. Bad news for AMD is the ARM servers CPUs - AWS already spun their own, others too really mostly Azure is behind. So medium to big stuck with Intel. Huge and hyper roll their own. AMD picks the scraps.
 
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RSR said:
I assume from your comments, you think its easy to jump ship and change platform? While I am not trying to isolate that comment, I am just wondering if you have any idea how long it takes to test, validate a platform so it can be productised and sold. There is also more than just hosts (Servers) which also use Intel CPU's in the chain and as of yet, I have not seen any AMD offerings yet from a large vendor.
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Despite all the problems many customers have 'jumped ship' (DC 33%) already and the number is growing. Of those how many would go back to Intel. Sure, when AMD only had a few percentage point of the DC / Hyperscalers Intel could keep them at bay but now, as in any business, the bottom line ia ALL. If you can't provide a service to match your competitor your finished and Intel can't afford to sugar coat their contracts anymore.
The longer you wait before jumping ship the more chance you've got of going down with it. Change is happening and you have to move with the times.
Testing / validating or whatever WILL be done

Intel needs a good product to sell and when that comes along that too will have the need for testing / validating. IMHO Intel have a lot of catching up to do (and to do it on a level playing field will take an enormous effort)
 
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