Still $14 Billion Better Than We Did
2022 was a hard year overall and that is reflected in the earnings announcement from Intel late yesterday. Their overall earnings for the year were down 20% compared to 2021, or 16% if you prefer GAAP free earnings; a total of $63.1 billion. As for the fourth quarter only, their $14.0 billion of earnings reflects a 32% drop in revenue, 28% non-GAAP. Those earnings are of a size that their competition can only dream of, but for Intel they represent a major problem.
When you break it down, their client computing group and data centre groups both saw revenue drop over 30%. This reflects the state of the market, as consumers and companies simply didn’t have the budget to purchase chips in the volumes of previous years. The launch of Raptor Lake came at an unfortunate time, and Intel simply haven’t been able to recoup the investments they made in development. MobileEye, foundry services and accelerated computing and graphics on the other hand did see increases, however those service lines represent only a small percentage of Intel’s total revenue.
This has already had an impact at Intel, as they have decided to abandon their network switch business altogether. Their purchase of Barefoot networks was barely three years ago, but it seems that that IP was not enough to let them compete against the established players in the networking business. The Network And Edge Group will likely still exist for a bit to support existing customers but there won’t be any shiny new kit coming out.
The second casualty is a bit more of a surprise. Intel announced the end of their Pathfinder for RISC-V Program, effective immediately and are suggesting any existing customers should find a third party RISC-V supplier for any support or development going forward. Some of their other RISC-V projects will survive, so Intel is not abandoning that architecture altogether, but the Pathfinder program is kaput.
During the earnings call Pat Gelsinger suggested their could be more cuts to come, but did not specify where they might happen.