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HPC & AI Wall StreetSANTA CLARA, Calif., October 27, 2022 – Intel Corporation today reported third-quarter 2022 financial results.
NEWS SUMMARY
- Third-quarter GAAP revenue of $15.3 billion, down 20% year over year (YoY), and non-GAAP revenue of $15.3 billion, down 15% YoY.
- Third-quarter results include GAAP restructuring charges of $664 million, reflecting initial cost reduction actions.
- The company is focused on driving $3 billion in cost reductions in 2023, growing to $8 billion to $10 billion in annualized cost reductions and efficiency gains by the end of 2025.
- Third-quarter GAAP earnings per share (EPS) was $0.25; non-GAAP EPS was $0.59.
- Listed Mobileye on the Nasdaq Stock Exchange this week.
- Revising full-year revenue guidance to $63 billion to $64 billion, reflecting continued macroeconomic headwinds.
“Despite the worsening economic conditions, we delivered solid results and made significant progress with our product and process execution during the quarter,” said Pat Gelsinger, Intel CEO. “To position ourselves for this business cycle, we are aggressively addressing costs and driving efficiencies across the business to accelerate our IDM 2.0 flywheel for the digital future.”
“As we usher in the next phase of IDM 2.0, we are focused on embracing an internal foundry model to allow our manufacturing group and business units to be more agile, make better decisions and establish a leadership cost structure,” said David Zinsner, Intel CFO. “We remain committed to the strategy and long-term financial model communicated at our Investor Meeting.”
Q3 2022 Financial Highlights
| GAAP | Non-GAAP | ||||||
| Q3 2022 | Q3 2021 | vs. Q3 2021 | Q3 2022 | Q3 2021 | vs. Q3 2021 | ||
| Revenue ($B) | $15.3 | $19.2 | down 20% | $15.3^ | $18.1 | down 15% | |
| Gross Margin | 42.6% | 56.0% | down 13.4 ppts | 45.9% | 58.3% | down 12.4 ppts | |
| R&D and MG&A ($B) | $6.0 | $5.5 | up 10% | $5.4 | $4.8 | up 12% | |
| Operating Margin | (1.1)% | 27.2% | down 28.4 ppts | 10.8% | 31.8% | down 21 ppts | |
| Tax Rate | 642.0% | 0.5% | n/m1 | (38.7)% | (4.2)% | n/m1 | |
| Net Income ($B) | $1.0 | $6.8 | down 85% | $2.4 | $5.9 | down 59% | |
| Earnings Per Share | $0.25 | $1.67 | down 85% | $0.59 | $1.45 | down 59% | |
1 Not meaningful.
In the third quarter, the company generated $1.0 billion in cash from operations and paid dividends of $1.5 billion.
Business Unit Summary
Intel previously announced several organizational changes to accelerate its execution and innovation by allowing it to capture growth in both large traditional markets and high-growth emerging markets. This includes the reorganization of Intel’s business units to capture this growth and provide increased transparency, focus and accountability. As a result, the company modified its segment reporting in the first quarter of 2022 to align to the previously announced business reorganization. All prior-period segment data has been retrospectively adjusted to reflect the way the company internally manages and monitors operating segment performance starting in fiscal year 2022.
| Key Business Unit Revenue and Trends | Q3 2022 | vs. Q3 2021 | |||
| Client Computing Group (CCG) | $8.1 billion | down | 17% | ||
| Datacenter and AI Group (DCAI) | $4.2 billion | down | 27% | ||
| Network and Edge Group (NEX) | $2.3 billion | up | 14% | ||
| Accelerated Computing Systems and Graphics Group (AXG) | $185 million | up | 8% | ||
| Mobileye | $450 million | up | 38% | ||
| Intel Foundry Services (IFS) | $171 million | down | 2% | ||
Business Highlights
▪ Intel continues to make progress with its goal of achieving five nodes in four years. Intel 4 is progressing towards high-volume-manufacturing, and the company expects to tape out a production stepping of Meteor Lake in the fourth quarter, the final step in taking the 14th Gen Intel Core processors from the design phase to early production in silicon. Intel 3 continues to progress on schedule. On Intel 20A and Intel 18A, Intel’s first internal test chips and those of a major potential foundry customer have taped out with products undergoing fabrication.
▪ In the third quarter, CCG launched the 13th Gen Intel Core processors, which offer the world’s fastest desktop processor and optimized gaming, content creation and productivity. CCG also introduced Intel Unison to deliver best-in-industry multidevice user experiences.
▪ DCAI shipped its 4th Gen Intel Xeon Scalable processor high-volume SKUs. In addition, Google Introduced its C3 machine series powered by Intel’s 4th Gen Intel Xeon Scalable processor and Google’s custom Intel Infrastructure Processing Unit E3200.
▪ NEX introduced its 12th Gen Intel Core processors optimized for IoT applications, designed for use cases across retail, banking, hospitality, education, industrial manufacturing and healthcare.
▪ AXG launched the Intel Data Center GPU Flex Series, giving customers a single GPU solution for a wide range of visual cloud workloads, and the Intel Arc A770 and A750 desktop GPUs, bringing much-needed GPU pricing and performance balance to gamers around the world.
▪ This week Mobileye went public on the Nasdaq Stock Exchange, which Intel believes will unlock value for Intel’s stockholders.
▪ IFS announced that NVIDIA has committed to joining the U.S. Department of Defense’s (DOD) RAMP-C program, led by Intel, which enables both commercial foundry customers and the DOD to take advantage of Intel’s at-scale investments in leading-edge technologies. In addition, since the second quarter, IFS has expanded engagements to seven of the 10 largest foundry customers, coupled with consistent pipeline growth to include 35 customer test chips.
During the quarter, Intel introduced the Semiconductor Co-Investment Program (SCIP), a new funding model for the capital-intensive semiconductor industry. As part of SCIP, Intel signed a definitive agreement with Brookfield Asset Management, one of the largest global alternative asset managers, under which the companies will jointly invest up to $30 billion in Intel’s manufacturing expansion at its Ocotillo campus in Chandler, Arizona. The company also made progress toward creating a geographically balanced, secure and resilient semiconductor supply chain as it broke ground on two of the world’s most advanced chipmaking facilities in Ohio. This site is intended to power a new generation of innovative products from Intel and serve the needs of foundry customers as part of the company’s IDM 2.0 strategy.
As Intel embarks on its next phase of IDM 2.0, it is embracing a foundry mindset and model for its IFS customers and Intel product lines. To drive this, Intel created the IDM 2.0 Acceleration Office (IAO) led by Stuart Pann, chief business transformation officer. The IAO will be responsible for fully operationalizing Intel’s IDM 2.0 model and for developing and implementing the systems and processes to support the company’s internal requirements and external foundry customer commitments. This is intended to allow Intel to identify and address structural inefficiencies that exist in its current model, achieve more transparency on its financial execution, better measure itself against other foundries and drive to best-in-class foundry performance.
Business Outlook
Intel’s guidance for the fourth quarter and full year includes both GAAP and non-GAAP estimates. Reconciliations between GAAP and non-GAAP financial measures are included below.
| Q4 2022 | GAAP | Non-GAAP | ||
| Approximately | Approximately | |||
| Revenue | $14-15 billion | $14-15 billion^ | ||
| Gross Margin | 41.4% | 45.0% | ||
| Tax rate | 40% | 14% | ||
| Earnings (loss) per share | $(0.10) | $0.20 |
| Full-Year 2022 | GAAP | Non-GAAP | ||
| Approximately | Approximately | |||
| Revenue | $63-64 billion | $63-64 billion^ | ||
| Gross Margin | 43.1% | 47.5% | ||
| Tax rate | (5)% | 2% | ||
| Earnings per share | $2.00 | $1.95 | ||
| Full-year net capital spending | $25 billion | $21 billion | ||
| Adjusted free cash flow | N/A | ($2-4 billion) |
Actual results may differ materially from Intel’s Business Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.
Earnings Webcast
Intel will hold a public webcast at 2 p.m. PDT today to discuss the results for its third quarter of 2022. The live public webcast can be accessed on Intel’s Investor Relations website at www.intc.com. The Q3’22 earnings presentation and webcast replay will also be available on the site.
About Intel
Intel (Nasdaq: INTC) is an industry leader, creating world-changing technology that enables global progress and enriches lives. Inspired by Moore’s Law, we continuously work to advance the design and manufacturing of semiconductors to help address our customers’ greatest challenges. By embedding intelligence in the cloud, network, edge and every kind of computing device, we unleash the potential of data to transform business and society for the better. To learn more about Intel’s innovations, go to newsroom.intel.com and intel.com.
Click here to view the release and additinoal information on Intel’s website.
Source: Intel Corp.
