Shulou(Shulou.com)11/24 Report--

On January 27, chip giant Intel released its results for the fourth quarter and full year of 2022 after U.S. stocks closed on Thursday local time. Intel reported fourth-quarter revenue of $14 billion, down 32 per cent from a year earlier, with a net loss of nearly $700m, compared with net profit of $4.6 billion in the same period last year, and a diluted loss of 16 cents per share, compared with earnings of $1.13 per share in the same period last year. Intel shares tumbled nearly 10 per cent in after-hours trading after the results were released.

The following are the main points of Intel's fourth-quarter and full-year results:-- fourth-quarter revenue was $14 billion, down 32% from $20.5 billion in the same period last year and 28% on a non-GAAP basis. Revenue for the year was $63.1 billion, down 20% from $79 billion last year and 16% year-on-year on a non-GAAP basis.

-- the net loss in the fourth quarter was $700 million, while the net profit in the same period last year was $4.6 billion, down 114% from profit to loss compared with the same period last year. According to non-generally accepted accounting principles, the net profit was $400 million, much lower than the $4.7 billion in the same period last year and down 28% from the same period last year. Full-year net profit was $8 billion, down 60% from $19.9 billion last year and 65% on a year-on-year basis based on non-GAAP

-- A loss of $0.16 per share in the fourth quarter, compared with earnings per share of $1.13 in the same period last year, a year-on-year profit to loss, down 114%. Based on non-GAAP, earnings per share were $0.1, much lower than $1.15 in the same period last year, down 92% from a year earlier. Full-year earnings per share were $1.94, down 60% from $4.86 a year earlier. Earnings per share were $1.84 on non-GAAP terms, down 65% from a year earlier.

-- operating profit margin in the fourth quarter was negative 8.1%, compared with 24.3% in the same period last year, down 32.4 basis points. Based on non-GAAP accounting standards, operating profit margin was 4.3%, down 23.9 basis points from 28.2% in the same period last year. Full-year operating profit margin was 3.7%, down 19.9 basis points from 24.6% last year, and 19.9 basis points lower than the same period last year based on non-generally accepted accounting standards.

-- the gross profit margin in the fourth quarter was 39.2%, down 14.5 basis points compared with 53.6% in the same period last year, and 43.8% in non-GAAP terms, down 12.1 basis points from 55.8% in the same period last year. The gross profit margin for the whole year was 42.6%, down 12.8 basis points from 55.4% last year, and 10.8 basis points on a year-on-year basis based on non-generally accepted accounting standards.

-Research and development and marketing, general and administrative expenses (MG&A) were $6.2 billion in the fourth quarter, up 2 per cent from $6 billion in the same period last year. For the whole year, MG&A was $24.5 billion, up 13% from $21.7 billion last year, and 14% on a year-on-year basis based on non-GAAP.

Business highlight-Intel continues to make progress towards its goal of achieving five nodes within four years and is expected to regain its leading position in transistor and power performance by 2025. Intel 7 nano process chips are currently being mass produced to meet the needs of clients and servers. Intel 4 nano process chips are ready and are expected to launch Meteor Lake in the second half of 2023. Intel 3 nanotechnology continues to make progress and is on the right track.

In the fourth quarter of 2022, CCG launched the 13th generation of Intel ®Core Desktop processors, starting with desktop K processors and Intel ®Z790 chipsets. In addition, in December 2022, Intel partnered with Asustek to officially set a new world record for overclocking, pushing the 13th generation Intel Core i9-13900K to break through the 9 gigahertz mark for the first time.

In January 2023, DCAI, with the support of customers and partners, increased production to meet a large backlog of demand.

-- NEX achieved double-digit revenue growth for the second year in a row as Intel made milestones in key products such as IPU E2000 (Mount Evans), Raptor Lake packs, Alder Lake N and Sapphire Rapids.

-- AXG achieved record revenue in the fourth quarter and throughout the year.

-- IFS achieved record revenue in the fourth quarter and the whole year, actively working with 7 of the 10 largest contract manufacturing customers. Intel 3 Nano has also added a leading provider of cloud, edge and data center solutions as a customer.

Intel completed Mobileye's IPO, which posted record revenue in the fourth quarter and full year of 2022. Mobileye continues to perform well in its core advanced driving assistance system (ADAS) business, which was launched in 2022 on 233 different models.

Executive comment Intel CEO Pat Kissinger (Pat Gelsinger) said: "despite the economic and market headwinds, we continued to make good progress in strategic transformation in the fourth quarter, including advancing our product roadmap and improving our operating structure and processes to improve efficiency while achieving the low goals of our guidance scope. Looking ahead to 2023, we will continue to address short-term challenges while working to meet our long-term commitments, including providing leading products based on open and security platforms, powered by mass production and supported by our excellent team. "

"in the fourth quarter, we took steps to resize our organisation, rationalize our investments and give priority to areas where we can provide the highest value in the long run," said David Zinsner, Intel's chief financial officer. "these measures consolidate our cost reduction target of $3 billion in 2023 and lay the foundation for achieving our target of $8 billion-$10 billion by the end of 2025."

Performance Outlook Intel provides guidance for the first quarter of 2023:

Since January 2023, Intel has extended the estimated life of some production machines and equipment from five to eight years. Compared with the estimated useful life by the end of 2022, Intel expects total depreciation expenses to decrease by about $4.2 billion in 2023, including an increase in gross profit of about $2.6 billion, a decrease of $400 million in R & D expenses and a $1.2 billion decrease in inventory value at the end of 2023.

In its outlook for the first quarter of 2023, Intel expects the change to increase operating profit by $350 million to $500m, or earnings per share by $0.07 to $0.10, of which about 75 per cent is spent on costs of sales and 25 per cent on operating expenses. Changes in depreciable life will not be included in the $3 billion cost savings plan in 2023 or the target of $8 billion to $10 billion in 2025 announced in the third quarter of 2022.

Intel expects an adjusted net loss of 15 cents a share and revenue of $10.5 billion to $11.5 billion in the first quarter of 2023. Analysts generally expect the company to earn 24 cents a share on revenue of $13.93 billion.

Intel's revenue fell 32% year-on-year in the fourth quarter ended December 31, 2022. As the PC market retreated from the epidemic boom, it was the company's fourth consecutive quarter of decline. The company recorded a net loss of $700m, compared with a profit of $4.6 billion in the same period last year.

In a conference call with analysts, Kissinger said Intel declined to provide a full-year earnings forecast because "the current environment is full of uncertainty". Intel will deal with "persistent economic headwinds" at least in the first half of this year. He said the weak economic environment was complicated by the expansion of chip inventories.

In the fourth quarter, Intel's customer computing group, including PC chips, contributed $6.63 billion in revenue, down 36%, below analysts' consensus expectations of $7.68 billion. Intel said demand in the consumer and education markets had fallen sharply and customers had reduced inventories. Gartner, a market research firm, says the PC market has shrunk more than in any quarter since it began tracking the industry in the 1990s.

On January 12, Intel forecast an overall target market of 270 million to 295 million PCs in 2023. On Thursday, the company said it now expects the market to be at the end of that range.

The data center and AI division, which consists of server chips, memory and field programmable gate arrays, recorded revenue of $4.3 billion, down 33%, but still above analysts' consensus expectations of $4.17 billion. Intel says it is under competitive pressure and the size of the market is declining.

Intel's network and edge divisions, including network products, reported revenue of $2.06 billion, down 1% from the same period last year and below analysts' consensus expectations of $2.26 billion.

Mr Gelsinger said the current business environment was "driving a short-term underload of our factory network". Zinsner, Intel's chief financial officer, explained on a conference call that underload charges incurred by factories narrowed Intel's fourth-quarter gross margin by 220 basis points (2.2%). The loading problem in the first quarter will reduce the gross profit margin by 400 basis points.

In the fourth quarter, Mobileye, a supplier of self-driving hardware and software that Intel bought for $15.3 billion in 2017, made its debut on Nasdaq. Intel still controls most of the voting rights of Mobileye common shares.

Intel remains the largest chipmaker in the United States by revenue. Semiconductor companies have seen a marked shift in chip oversupply amid fears of a recession, while demand for all-digital chips contributed to the shortage at the height of the COVID-19 epidemic. Intel's market share has also been eroded by competitors such as AMD and semiconductor companies that use British chip design specialist Arm technology.

Kissinger said Intel has launched large-scale layoffs, but the layoffs will continue in the first half of this year as the company strives to meet its spending reduction target of $3 billion. "We are more active in implementing cost measures," he said. " The chief executive said the company had pulled out of seven businesses and saved $1.5 billion since he rejoined in 2021. He added that the company was ending its investment in some network hardware.

Chip companies, including Intel, have cut production plans and reduced capital spending, including computer memory giants Samsung Electronics and Micron Technologies, which play an important role in the chip market, which is seen as a leading indicator of technology demand.

Intel has lagged behind its Asian chip-making competitors in the race to make the fastest chips with the smallest transistors, but Kissinger has plans to return to the lead within a few years. Despite spending cuts, Intel continues to push ahead with unprecedented expansion plans to expand its chip plant.

Driven by potentially billions of dollars in government grants and US tax breaks, Intel is building new factories in Arizona, Ohio and Germany and expanding elsewhere. Intel executives said they remained committed to major projects, although the company had delayed construction of its German plant because of a deteriorating market outlook and had taken other money-saving measures.

"We are adjusting recent spending to manage the cost environment while maintaining our long-term strategic investment," Kissinger admits. "it will be a journey that will last for many years."

Intel shares rose 39 cents, or 1.31%, to close at $30.09 on Thursday. But the stock tumbled nearly 10 per cent in after-hours trading due to lower-than-expected revenue and first-quarter revenue. Intel shares have fallen about 42% over the past 12 months, while the s & p 500 is down 7% over the same period.

In the past 52 weeks, Intel shares have peaked at $52.51 and as low as $24.59. Based on Thursday's closing price, Intel has a market capitalization of about $124.2 billion.

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