Intel: Largest paper loss in the company's history
Intel's books show a huge loss of 16.6 billion US dollars. Nevertheless, the stock market is enjoying the operating business.
The Core i-12000 were the first desktop processors with Intel 7 manufacturing technology. Intel is phasing this out.
(Image: heise online / mma)
Intel has never had such a large net loss: the chip manufacturer has reported 16.6 billion US dollars in its books. However, most of this is not supposed to affect the actual cash flow – according to Intel, it only exists on paper. However, the adjusted figures (non-GAAP) still show a net loss of two billion dollars.
Intel recognized a total of $15.9 billion in impairment charges and $2.8 billion in restructuring charges, which break down as follows:
- 9.9 billion dollars in non-cash charges due to the establishment of a valuation allowance on deferred tax assets in the U.S.
- 3.1 billion dollars from impairments and accelerated depreciation of manufacturing equipment, primarily for the Intel 7 manufacturing process.
- 2.9 billion dollars in goodwill impairments for certain divisions, including 2.6 billion dollars for the automotive division Mobileye alone.
- 2.8 billion dollars for restructuring, primarily severance payments for around 15,000 redundant jobs. Only this item is actually expected to have a negative impact on cash flow.
Intel relates the first major item to repeated losses over the past three years. The goodwill impairment of Mobileye should correspond to the actual goodwill, which was recently too high in the books. Mobileye's sales of chips for driver assistance systems, for example, collapsed in 2024.
There is hardly any demand for the Intel 7 production process. Intel is essentially still using it to manufacture its discontinued Raptor Lake processors such as the Core i-14000 (desktop) and Core 100 (notebooks). According to the manufacturer, some production facilities and in some cases production rooms cannot be used for more modern processes. It was only after Intel 7 that the company introduced lithography systems with extreme ultraviolet (EUV) exposure technology. The impairment is intended to reflect "excessive expenditure in the COVID era". Chip demand was high in 2020 and 2021, followed by a downturn.
Decent turnover
Meanwhile, turnover of 13.3 billion dollars is at the upper end of expectations and thus "only" 6% below the previous year. The Client Group (CCG) with all processors and graphics cards for desktop PCs and notebooks shrank by 7 percent to 7.3 billion dollars. It remains Intel's most important division by far.
The Data Center and AI (DCAI) server division grew by 9 percent to 3.3 billion dollars. This includes the Xeon 6700E (Sierra Forest) with up to 144 efficiency cores, which appeared in June 2024, but hardly any of the Xeon 6700P (Granite Rapids), which followed in September. The even larger Xeon 6900E and Xeon 6900P will not follow until 2025.
The Network and Edge (NEX) division grew by 4 percent to 1.5 billion dollars. Intel's subsidiary Altera for programmable logic gate chips (FPGAs) continues to fare badly with sales of just 412 million dollars. Mobileye's turnover remains at just under half a billion dollars.
The manufacturer puts its turnover from chip production (Intel Foundry) at 4.4 billion dollars – 8 percent less than a year earlier. Intel's CPU divisions now pay "standard market" prices to Intel Foundry, which are booked separately. Most of the loss is therefore attributable to the manufacturing division.
Intel-Präsentation zu den Quartalszahlen (4 Bilder)
Share price rises
Despite the high net loss, the stock market is pleased with the report – probably also because worse was feared and the operating cash flow is good. Intel reported the latter at 4.1 billion dollars, 78 percent more than in the previous quarter.
Immediately after the announcement of the annual report, the share price shot up by 10 percent and then stabilized at a plus of 6 percent. The share is thus back at the level of a week ago.
Intel expects sales of between 13.3 billion and 14.3 billion dollars in the current fourth quarter. Even at the upper end, sales would fall by 7 percent year-on-year.
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