Intel revenue falls 8% to $14.2B in Q3

Intel reported that its third-quarter revenue was $14.2 billion, down 8% from a year earlier.

Third-quarter earnings per share (EPS) were 7 cents a share, while non-GAAP EPS was 41 cents a share. The revenue number exceeded the high end of Intel’s guidance and EPS benefited from strong operating leverage and expense discipline, the company said.

Meanwhile, the company said it hit key milestones across process and product, foundry and artificial intelligence (AI).

Intel said it is guiding revenue expectations for Q4 to $14.6 billion to $15.6 billion, with EPS of 23 cents a share and non-GAAP EPS of 44 cents a share. In after-hours trading, Intel’s stock is up 6% to $34.50 a share as it beat expectations. Intel’s market value is $136 billion, about half of what it was in 2021.

“We delivered a standout third quarter, underscored by across-the-board progress on our process and product roadmaps, agreements with new foundry customers, and momentum as we bring AI everywhere,” said Pat Gelsinger, Intel CEO, in a statement. “We continue to make meaningful progress on our IDM 2.0 transformation by relentlessly advancing our strategy, rebuilding our execution engine and delivering on our commitments to our customers.”

David Zinsner, Intel CFO, said in a statement, “Our results exceeded expectations for the third consecutive quarter, with revenue above the high end of our guidance and EPS benefiting from strong operating leverage and expense discipline. As demonstrated by our recent portfolio actions, we are highly focused on being great allocators of our owners’ capital and unlocking value for shareholders.”

Intel previously announced the organizational change to integrate its Accelerated Computing Systems and Graphics Group into its Client Computing Group and Data Center and AI Group. This change is intended to drive a more effective go-to-market capability and to accelerate the scale of these businesses, while also reducing costs. As a result, the company modified its segment reporting in the first quarter of 2023 to align to this and certain other business reorganizations.

Business unit revenue and trends

In Q3, the Client Computing Group (CCG) saw revenue of $7.9 billion, down 3% from a year ago.

The Data Center and AI (DCAI) group saw revenue of $3.8 billion, down 10%.

Network and Edge (NEX) reported revenue of $1.5 billion, down 32%.

Mobileye revenue was $530 million, up 18%.

And Intel Foundry Services (IFS) reported revenue of $311 million, up 299%

Business highlights

Intel said it remains on track to meet its goal of achieving five manufacturing nodes in four years and to regain transistor performance and power performance leadership by 2025. Along with Intel 7, Intel 4, the company’s first node using extreme ultraviolet (EUV) technology, is now in high-volume manufacturing.

Intel also achieved a critical milestone on Intel 18A with the release of the 0.9 PDK. In addition, Intel announced one of the industry’s first glass substrates for next-generation advanced packaging, planned for the latter part of this decade. This breakthrough achievement will enable the continued scaling of transistors in a package and advance Moore’s Law to deliver data-centric applications, Intel said.

The company is continuing its investment in manufacturing capacity to create a geographically balanced, secure and resilient supply chain, Intel opened Fab 34 in Leixlip, Ireland, during the quarter. Combined with the company’s planned wafer fabrication facility in Magdeburg, Germany, and planned assembly and test facility in Wrocław, Poland, this will help create a first-of-its-kind, end-to-end leading-edge semiconductor manufacturing value chain in Europe.

This week, Intel shared its plans to begin installation of the world’s first high-NA EUV tool for commercial
use by the end of the year to continue the company’s modernization and infrastructure expansion of the
Gordon Moore Park at Ronler Acres in Oregon, one of the world’s leading semiconductor innovation and
productization centers.

Intel has submitted all four of its major manufacturing proposals in Arizona, New Mexico, Ohio and Oregon, representing more than $100 billion of U.S. manufacturing and research investments, to the U.S.
Department of Commerce’s CHIPS Program Office.

Intel announced that a major customer committed to Intel 18A and Intel 3 with a meaningful pre- payment, allowing the company to accelerate its plans to build two new leading-edge chip factories at its Ocotillo campus in Chandler, Arizona. In addition, IFS and Tower Semiconductor announced an agreement where Intel will provide foundry services and 300 mm manufacturing capacity to help Tower serve its customers globally, utilizing Intel’s advanced manufacturing facility in New Mexico.

Product details

Intel’s 4thGen Intel Xeon Scalable processor continues its strong ramp, with the world’s top-10 cloud service providers now deploying it in general availability. In addition, the company’s 5th Gen Intel
Xeon processor, code-named Emerald Rapids, is in production and began shipping to customers this
month, officially launching Dec. 14.

Customer momentum continues with Intel Gaudi2 accelerators, whose competitive performance was recently validated by MLCommons benchmarking results. Together with Stability AI, Intel is building one of the world’s largest AI supercomputers entirely on 4th Gen Intel Xeon Scalable processors and 4,000 Intel Gaudi2 AI accelerators.

In client computing, Intel is ushering in the age of the AI PC with Intel Core Ultra processors, code-named Meteor Lake. Built on Intel 4, the Intel Core Ultra processor began shipping to customers in the third
quarter and will officially launch Dec. 14, along with the 5th Gen Intel Xeon processor.

Earlier this month, Intel launched the new Intel Core 14th Generation desktop processor family, delivering the world’s fastest desktop frequencies and best desktop experience for enthusiasts.

As Intel continues to look for innovative ways to unlock value for shareholders, the company recently announced its intent to separate its Programmable Solutions Group (PSG) operations into a standalone business. This will give PSG the autonomy and flexibility it needs to fully accelerate its growth and more effectively compete in the FPGA industry. The company may explore opportunities with private investors to accelerate the business’s growth, with Intel retaining a majority stake. Over the next two to three years, Intel intends to conduct an IPO for PSG.

And in the third quarter, Intel also agreed to sell a 10% stake in its IMS Nanofabrication business (IMS) to TSMC, valuing IMS at approximately $4.3 billion, consistent with the valuation of the recent stake sale to Bain Capital Special Situations. Together, these transactions underscore Intel’s focus on advancing its IDM 2.0 strategy, driving growth in its core businesses and creating value for shareholders across all of its assets.