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[winjer]

Intel posts biggest quarterly loss in company history as processor sales plunge

Intel isn't in great shape right now. The tech giant's Q1 2023 revenues fell 36 percent year-over-year to $11.7 billion – the largest drop recorded by the...

www.techspot.com

Intel Posts Its Biggest Loss on Record in Q1 2023: Rock Bottom or a Sinking Ship?

Intel has reported a GAAP loss of $2.8 billion for Q1 2023, which constitutes a new record going as far back as 1993

wccftech.com

The tech giant's Q1 2023 revenues fell 36 percent year-over-year to $11.7 billion – the largest drop recorded by the company in its 55 years of existence. While it did pay dividends of over $1.5 billion, investors are worried about the long-term profitability of the company as its gross margin dropped from 50.4 percent in Q1 to 34.2 percent in the first quarter of this year.

When zooming in on the latest financial report, the figures look brutal for Intel. The Client Computing Group (CCG) recorded $5.8 billion in revenue in the first three months of 2023, a sharp 28 percent decline year-over-year. Like Samsung, the Santa Clara company blames low consumer demand and inventory adjustments at OEMs for the result.

Still, CCG remains the biggest revenue driver and CEO Pat Gelsinger expressed optimism about a potential recovery in consumer and enterprise spending on PC and server processors. It's also worth noting that Intel recently reorganized its GPU division into two smaller units that are now integrated into the Client Computing Group and Data Center and AI Group, respectively.

Intel believes it can become a major player in the discrete GPU market and has laid out an aggressive roadmap for 2nd and 3rd-gen Arc GPUs, codenamed Battlemage and Celestial. So far it has only managed to capture six percent of the global market for laptop and desktop GPUs, which is a good start but not great for the bottom line. Intel fellow Tom Petersen earlier this year confirmed the company is sacrificing profit margins to grow market share, while the GPU division burned at least $3.5 billion between Q1 2021 and its recent reorganization in Q4 2022.

Moving on to the Data Center and AI Group (DCAI), it recorded $3.7 billion in revenue in the three months of 2023, a staggering 39 percent drop compared to the same period last year. This is an area where Gelsinger believes the worst is yet to come, and it's not hard to see why. Overall sales of x86 server chips are down, OEMs have surplus inventory, and AMD is happily chipping away at Intel's market share while Amazon, Facebook, and other tech giants are keen on embracing custom silicon based on Arm designs.

The Network and Edge Group (NEX) fared slightly better, though it still saw a 30 percent year-over-year drop to $1.5 billion in Q1 2023. Meanwhile, Intel Foundry Services (IFS) made a meager $118 in total sales and lost $140 million, something Intel says is the result of surging costs for building new fabs. IFS is central to Intel's strategy for the next decade, as the company wants to catch up with the likes of TSMC by 2025 and become a coveted contract chip manufacturer for companies both big and small.

MobilEye – a company Intel bought in 2017 to develop self-driving tech – is the only bright spot in an otherwise gloomy financial report. It recorded revenues of $458 million in Q1 2023, which is a healthy 16 percent increase year-over-year.

During an investor call, Intel briefly noted it is currently ramping up production on Intel 4 wafers, while development on Intel 3, Intel 20A, and Intel 18A remains on track. We expect the company will launch its Meteor Lake processors in the second half of this year, and these will be the first designs to also use TSMC nodes for the GPU, SoC, and I/O tiles in addition to Intel's own process technology.

 

[Tomi]

So, intel cpu's soon for bargain?

That would be great!

 

[killatopak]

Somebody finally lit a fire under their ass.

 

[feynoob]

That is mega loss.

 

[DenchDeckard]

Ouch!

 

[lh032]

next wednesday!!!??

 

[Nintendo's Witch]

Pc market as a whole is fucking dead right now.

 

[DonkeyPunchJr]

Pc market as a whole is fucking dead right now.

Yup, plus what it doesn’t mention in OP is that this was actually slightly better than the market was expecting and Intel’s stock is up as a result:

 

[winjer]

Yup, plus what it doesn’t mention in OP is that this was actually slightly better than the market was expecting and Intel’s stock is up as a result:

Investors have reacted negatively to Intel's latest earnings release, with the stock currently down around 2 percent in after-hours trading. While the company did exceed expectations, the biggest GAAP loss on record is obviously nothing to crow about.

 

[Laptop1991]

So that's Intel and Nvidia, something is not right about all this, that's mostly been my PC's CPU and GPU for over 20 years.

 

[Elios83]

The real issues for them will start if ARM based processors find their way massively in businesses that have been typically dominated by x86.

 

[In Cold Blood]

The real issues for them will start if ARM based processors find their way massively in businesses that have been typically dominated by x86.

"If".
At this point they don't compete against x86.

I would also add that there hasn't been a real need to keep updating you CPUs at this point.

 

[DenchDeckard]

How's AMD?

 

[Buggy Loop]

Investors have reacted negatively to Intel's latest earnings release, with the stock currently down around 2 percent in after-hours trading. While the company did exceed expectations, the biggest GAAP loss on record is obviously nothing to crow about.

What the hell, where does that come from? There’s no significant drop in after-hours trading, it’s oscillating in the ~0.3% range and didn’t go negative when trading stopped?

 

[German Hops]

How is this even possible?!

 

[Spyxos]

Intel Cpus consume too much power and then I have to replace almost my entire PC every 2 generations. No thanks. Too bad about the graphics cards, hopefully there will be more and stronger versions.

And the problem with Intel being far too uncompetitive is that Amd is becoming more and more like Intel.

 

[DaGwaphics]

Yikes. I know they are one of the biggest spenders in R&D, but still to be in the red by $2b.

 

[Buggy Loop]

Also aren’t they building huge foundries currently? That must be an insane money drain?

 

[lukilladog]

Also aren’t they building huge foundries currently? That must be an insane money drain?

Of US citizens tax dolars... Or at least printed dolars.

 

[kraspkibble]

AMD is the way to go now for CPUs. You shouldn't buy an Intel CPU unless you care about absolute top performance, can afford the cost of electricity these CPUs need, and don't mind sticking a huge AIO onto it to keep it from burning itself. The current AMD CPU line up is not only performing just as good if not better than Intel but they run cooler and require less power.

Competition is good. For too long Intel could do what they wanted. We'd still be on 4 core CPUs if it wasn't for AMD.

 

[Buggy Loop]

Of US citizens tax dolars... Or at least printed dolars.

Well, not 100% of it I would imagine… right?

 

[lukilladog]

Its odd that I have been going Intel for value builds for several years now.

 

[lukilladog]

Well, not 100% of it I would imagine… right?

I dont know, huge deals for sure.

 

[Chiggs]

As an Intel shareholder, I have to say the following:

• I support Pat Gelsinger's strategy...but he is playing the long game.
• AMD is just annihilating Intel with servers.
• Performance per watt is king, especially with AMD and Intel performing so identically with desktop and laptops.
  • And AMD is the clear winner in that area.

No easy way out for Intel, but if they can stick with their strategy of bringing fabs back on US soil, I support them 100%...even if I'm buying AMD, which I am.

Pc market as a whole is fucking dead right now.

Don't tell that to the braintrusts here on GAF that say things like:

• It's the Golden Age of PC Gaming!

and

• Who cares if the hardware sales figures over the last 3 years are among the worst since the mid-90s!

The real issues for them will start if ARM based processors find their way massively in businesses that have been typically dominated by x86.

It's inevitable, honestly. And fuck x86, while we're on the subject.

But if Gelsinger's strategy of setting up fabs in the US works, then he can start fabbing ARM.

 

[ReBurn]

Also aren’t they building huge foundries currently? That must be an insane money drain?

The soft PC market and lower than expected demand for their data center tech has them sitting on a lot of excess inventory that isn't moving fast enough. They've invested a lot of money in manufacturing stuff they haven't been able to sell.

As bad as the loss is they beat expectation by 11 cents per share. For whatever that's worth.

 

[lukilladog]

AMD is the way to go now for CPUs. You shouldn't buy an Intel CPU unless you care about absolute top performance, can afford the cost of electricity these CPUs need, and don't mind sticking a huge AIO onto it to keep it from burning itself. The current AMD CPU line up is not only performing just as good if not better than Intel but they run cooler and require less power.

Competition is good. For too long Intel could do what they wanted. We'd still be on 4 core CPUs if it wasn't for AMD.

Isnt the i3 still the budget value king?. My 12100f still seems pretty solid on latest ports.

 

[Thaedolus]

Pc market as a whole is fucking dead right now.

wtf does this even mean

 

[winjer]

As an Intel shareholder, I have to say the following:

• I support Pat Gelsinger's strategy...but he is playing the long game.
• AMD is just annihilating Intel with servers.
• Performance per watt is king, especially with AMD and Intel performing so identically with desktop and laptops.
  • And AMD is the clear winner in that area.

No easy way out for Intel, but if they can stick with their strategy of bringing fabs back on US soil, I support them 100%...even if I'm buying AMD, which I am.



Don't tell that to the braintrusts here on GAF that say things like:

• It's the Golden Age of PC Gaming!

and

• Who cares if the hardware sales figures over the last 3 years are among the worst since the mid-90s!

It's not just AMD. ARM is also doing a lot of damage.
For example, AWS uses their own custom ARM chips to power their servers.

 

[VAVA Mk2]

 

[Buggy Loop]

Who cares if the hardware sales figures over the last 3 years are among the worst since the mid-90s!

What

COVID PC hardware sales were so fucking high that it beat decades of highs. The drop down is, much like anything tech, drastic, but all this doom and gloom articles with « company X is -30% from previous year » is like a big duh, previous years they were abnormally high.

 

[kraspkibble]

Isnt the i3 still the budget value king?. My 12100f still seems pretty solid on latest ports.

maybe? but i'm not sure people should be buying a 4 core cpu for gaming. MAYBE for a super low budget PC.

The Ryzen 7600 looks better value overall and still worthy of being in a budget build.

 

[lukilladog]

wtf does this even mean

Its hyperbolic but we can see a market still flooded of previous generation cards, intel margins are terrible, new AMD cpus were selling bad, as is the latest 4070 card. We also start to get dirt cheap high refresh ips hdr monitors, and stuff like that. And if you sell the components of your PC after getting a new one, you probably will have the hardest time ever finding buyers.

 

[lukilladog]

maybe? but i'm not sure people should be buying a 4 core cpu for gaming. MAYBE for a super low budget PC.

The Ryzen 7600 looks better value overall and still worthy of being in a budget build.

15% more performance for twice the price? No thank you. I guess I don't care about having 130 fps instead of 160.

 

[Celcius]

They really need to pull down the heat and power consumption of their CPUs.

 

[winjer]

They really need to pull down the heat and power consumption of their CPUs.

They won't. Intel's strategy is to extract all performance possible at all costs, even ramping up clocks as high as the silicon can get.
This is an Intel engineer explaining that strategy.

 

[Nintendo's Witch]

wtf does this even mean

Sales in the PC business are fucked post COVID. Every manufacturer has been dropping 2 digits since then, educate yourself.

 

[Chiggs]

COVID PC hardware sales were so fucking high that it beat decades of highs.

That's cool...and now we're seeing declines that are the worst on record since the mid-90s, and this after a very volatile ten-year period.

Worldwide PC shipments totaled 65.3 million units in the fourth quarter of 2022, a 28.5% decrease from the fourth quarter of 2021, according to preliminary results by Gartner, Inc. This marks the largest quarterly shipment decline since Gartner began tracking the PC market in the mid-1990s. For the year, PC shipments reached 286.2 million units in 2022, a 16.2% decrease from 2021.

and...

The U.S. PC market declined 20.5% in the fourth quarter of 2022, registering its sixth straight quarter of shipment decline. Echoing the trend of the global PC market, both consumer and business PC spending slowed due to economic conditions.

“Even as vendors offered deep PC discounts during the holiday season in an attempt to lower inventory, consumers were not swayed to spare their money,” said Kitagawa.

and...

The EMEA PC market had a historical decline of 37.2% year over year, due to the intersection of political unrest, inflationary pressures, interest rate increases and a pending recession.

“A decline of this magnitude only happens when market demand effectively comes to a halt,” said Kitagawa. “Business and consumer confidence across EMEA has collapsed, leading to a huge drop in PC demand. A massive increase in inventory has also severely limited sell-in opportunities as sellers focus on moving old stock.”

and....

Total PC shipments in 2022 were close to pre-COVID levels, with 2019 shipments well below 300 million units,” said Kitagawa. “The PC industry experienced very unusual ups and downs over the past 11 years. After the extraordinary growth period between 2020 and 2021 due to the pandemic, the market has clearly begun a downward trend which will continue until the beginning of 2024.”

So, yeah...I'm sticking with 3 years...even though history hasn't been fully written yet. But hey, all eyes on 2024...I'm sure the march toward de-globalization, continued tension between US and China, and the destabilizing war in Ukraine will only help PC sales.

 

[Nintendo's Witch]

That's cool...and now we're seeing declines that are the worst on record since the mid-90s, and this after a very volatile ten-year period.



and...



and...



and....




So, yeah...I'm sticking with 3 years...even though history hasn't been fully written yet. But hey, all eyes on 2024...I'm sure the march toward de-globalization, continued tension between US and China, and the destabilizing war in Ukraine will only help PC sales.

You’re trying to make too much sense here, don’t bother with facts. But “Mu PC"

 

[Coulomb_Barrier]

What

COVID PC hardware sales were so fucking high that it beat decades of highs. The drop down is, much like anything tech, drastic, but all this doom and gloom articles with « company X is -30% from previous year » is like a big duh, previous years they were abnormally high.

No this is something beyond that. AMD have not been nearly as badly affected.

Most concerning of all for Intel is their server market collapse, where they've been hugely behind AMD for about 4-5 years now and their share keeps dropping.

 

[diffusionx]

The standard "PC" is where they dominate and obviously it has outsized importance on a forum like this, but it's not really a growth market anymore, and in everything else they are getting their ass kicked. AMD is destroying them with EPYC and even ARM is getting more viable by the day. Their low end stuff is bad too. Losing Apple's business didn't help. I think moving into GPUs and foundry business is a smart move but they have a long way to go.

 

[Chiggs]

You’re trying to make too much sense here, don’t bother with facts. But “Mu PC"

And we haven't even started discussing the disaster that is 2023 YTD.

 

[Buggy Loop]

That's cool...and now we're seeing declines that are the worst on record since the mid-90s, and this after a very volatile ten-year period.



and...



and...



and....




So, yeah...I'm sticking with 3 years...even though history hasn't been fully written yet. But hey, all eyes on 2024...I'm sure the march toward de-globalization, continued tension between US and China, and the destabilizing war in Ukraine will only help PC sales.

Peak a decade demand during Covid for hardware, peoples didn’t upgrade their Ampere cards and 5000 series CPU a year or two later, shock and awe, more news at 11

 

[Chiggs]

Peak a decade demand during Covid for hardware, peoples didn’t upgrade their Ampere cards and 5000 series CPU a year or two later, shock and awe, more news at 11

Gonna have to agree to disagree there, bud.

I think things are a bit more dire than you realize because of geopolitical/economic factors that will prove/are proving to be too much.

Again, I didn't even post anything from this year...and this year is bleak.

 

[Coulomb_Barrier]

They really need to pull down the heat and power consumption of their CPUs.

It's a bizarre strategy quite frankly. They can push their inefficient design so it is competitive with Ryzen but draws a shit tonne of power in desktop. But this design is pathetic in the server market.

Ryzen in reality is a server design first but tweaked for desktop. Intel's Raptor Lake and all those that precede it is the other way around and this shows.

 

[BennyBlanco]

Peak a decade demand during Covid for hardware, peoples didn’t upgrade their Ampere cards and 5000 series CPU a year or two later, shock and awe, more news at 11

A metric shit ton of people had to buy PCs during COVID to work from home.

 

[Chiggs]

It's not just AMD. ARM is also doing a lot of damage.
For example, AWS uses their own custom ARM chips to power their servers.

I'm an ARM guy, so this is music to my ears. I hope it forces a major change in the industry.

 

[Buggy Loop]

A metric shit ton of people had to buy PCs during COVID to work from home.

Yes!

And this results in a disruption of all previous years metrics. It’ll have huge long term repercussions, to quote myself from a previous thread :

What will likely happen for the next generations of GPUs is we'll see something similar to car traffic waves, also called phantom traffic jams, where the phenomena that happened maybe 20 mins ago still has oscillations and impact on traffic because of the disruption on uniform flow. They are less intense than the initial jam, but still reverberate long after. I predict we'll see 5000 series popular (but less than ampere), 6000 series DOA, 7000 series popular, 8000 series DOA.. for a long time. We'll basically be upgrading en masses synchro for a long time because Ampere kind of reset the starting point.

To be seen.

 

[PaintTinJr]

The real issues for them will start if ARM based processors find their way massively in businesses that have been typically dominated by x86.

E cores is a huge design mistake for marketing CPUs IMO and keeping the CoreI naming and breaking out a 4th tier was equally non-aspirational .

They've completely messed up their product range IMO, because you need to have the knowledge of a lifetime buyer to unravel all the options and tiers and gotchas with their CPUs and chipset, and that's not even getting started on the reality that laptop CPUs that have more than 2 P-cores - so effectively a modern day Centrino2/Core2Duo as the limiting factor for 99% of software - are priced so high there is zero consumer value or OEM value in the products, and they still sell garbage like Pentium Gold to drive the prices up from the bottom even more.

Look at these prices here for a surface tablet with a Core i5 mobile CPU (2 p-cores as the bottleneck) starting at 900

https://www.microsoft.com/en-gb/d/surface-pro-9/93VKD8NP4FVK/

And then look at what Intel are charging for that chip ($350)

https://ark.intel.com/content/www/u...1235u-processor-12m-cache-up-to-4-40-ghz.html

In short, intel are charging OEMs 3x the price they should for chipsets and CPUs, and they need to gut 90% of the range to bring back aspirational sales of people upgrading tiers and to make things like Ultrabooks common place IMO

 

[Thaedolus]

Sales in the PC business are fucked post COVID. Every manufacturer has been dropping 2 digits since then, educate yourself.

Sales go up and down, doesn’t indicate that the business is “dead.”

 

[demented waffle]

Awaiting a response from a certain member.

No that it matters, it's all message board fodder at this point, anyways.