Intel's chip contracting plan in spotlight on earnings day
Intel is set to report its sixth consecutive net loss on Thursday, while revenue is expected to drop for a fifth straight quarter, according to estimates from LSEG data.
The storied chipmaker, once synonymous with America's chipmaking heft, has lagged due to years of strategic missteps.
Rival Nvidia has leaped ahead in the booming artificial intelligence chip industry, while rival AMD (AMD.O), opens new tab has been gaining share in Intel's mainstay personal computer and server semiconductor markets.
CEO Tan has been focusing on a next-generation chipmaking process called 14A to win big external customers, shifting away from 18A, a technology that his predecessor Pat Gelsinger had spent billions of dollars to develop.
Such a move could lead to a big writedown, an expense that would surely displease investors even as Intel has signaled that the new technology will help it be more competitive against Taiwan's TSMC (2330.TW), opens new tab, the world's biggest chipmaking factory.
Longer-term commentary on the company's plans for the 14A technology "will hold more weight this earnings call than anything else", Stifel analysts wrote ahead of the earnings.
Intel is expected to report a net loss of about $1.25 billion for the April-June quarter, while its sales are expected to drop more than 7% to $11.92 billion. Last year was Intel's first unprofitable year since 1986.
Writedowns could amount to hundreds of millions, if not billions, of dollars, according to analysts, and might impact the timeline for the foundry to break even.
Intel's finance boss David Zinsner said in May he expected the unit to break even in 2027 and that would require external customers to generate low- to mid-single-digit billions in revenue.
Intel's foundry unit is expected to generate $4.49 billion in sales in the second quarter, though a majority of this would come from chips Intel produces for itself, analysts said.
Since taking over as CEO in March, Tan has focused on shedding non-core assets. In April, Intel agreed to sell a 51% stake in its Altera programmable chip business for $4.46 billion. The company has also considered divesting its network and edge businesses as well.
Intel's stock has risen 16% so far this year, compared with a 13.23% rise in the broader chip index (.SOX), opens new tab.
Investors will watch if Tan sells more assets, further flattens out the management structure, or expands the global layoffs the company announced last year.
Intel, as with other chipmakers, is facing customers who are dragging their feet on their spending, due to uncertainty from U.S. President Donald Trump's trade war.
Revenue at Intel's personal computer unit is expected to dip some 2% to $7.25 billion in the second quarter after customers pulled forward orders to the first three months of the year due to the threat of tariffs.
Analog chipmaker Texas Instrument (TXN.O), opens new tab flagged similar troubles on Tuesday, sending its shares down 11% after hours. Chip-equipment maker ASML (ASML.AS), opens new tab and TSMC (2330.TW), opens new tab have also warned tariff-related uncertainty has muddied the outlook for them.
Revenue in Intel's data center unit, however, is expected to jump about 20% to $3.66 billion, signaling improving demand for traditional server chips after several quarters of poor sales.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
24 minutes ago
- Reuters
Samsung Elec signs $16.5 billion deal to make chips for global firm
SEOUL, July 28 (Reuters) - Samsung Electronics ( opens new tab said on Monday it has signed a $16.5 billion deal to supply chips for an unidentified major global company, sending its shares up 3.5%. The South Korean tech giant said the deal signed on Saturday was for contract chip manufacturing and details of the agreement including the counterpart and terms would not be disclosed until the contract is completed at the end of 2033. The deal comes as Samsung is struggling to compete in the race to make artificial intelligence chips, which has hit its profits and share price. Samsung has customers like Tesla (TSLA.O), opens new tab and Qualcomm (QCOM.O), opens new tab for its foundry business, while bigger rival TSMC has customers like Apple (AAPL.O), opens new tab and Nvidia (NVDA.O), opens new tab. The deal comes as South Korea is seeking U.S. partnerships in chips and shipbuilding as it is making last-ditch efforts to reach a trade deal to eliminate or cut potential 25% U.S. tariffs. It is not clear how the order would affect Samsung's plan to start production at its new factory in Texas, which has been delayed as it had struggled to win major customers. Samsung is grappling to boost production yields of its latest 2-nanometer technology, and the order is unlikely to involve the cutting-edge tech, Lee Min-hee, an analyst at BNK Investment & Securities, said. Samsung has been losing market share to TSMC in contract manufacturing, underscoring technological challenges the firm faces in mastering advanced chip manufacturing to lure the likes of Apple and Nvidia away from TSMC, analysts said. ($1 = 1,383.6800 won)
Reuters
24 minutes ago
- Reuters
Oil rises as US-EU deal lifts trade optimism
SINGAPORE, July 28 (Reuters) - Oil prices rose on Monday after the U.S. reached a trade deal with the European Union and may extend a tariff pause with China, reducing concerns that potentially higher levies would limit economic activity and impact fuel demand. Brent crude futures inched up 22 cents, or 0.32%, to $68.66 a barrel by 0035 GMT while U.S. West Texas Intermediate crude was at $65.38 a barrel, up 22 cents, or 0.34%. The U.S.-European Union trade deal and a possible extension in U.S.-China tariff pause are supporting global financial markets and oil prices, IG markets analyst Tony Sycamore said. The United States and the European Union struck a framework trade agreement on Sunday that will impose a 15% import tariff on most EU goods, half the threatened rate. The deal averted a bigger trade war between two allies that account for almost one-third of global trade and could crimp fuel demand. Also, senior U.S. and Chinese negotiators will meet in Stockholm on Monday aiming to extend a truce keeping sharply higher tariffs at bay ahead of the August 12 deadline. Oil prices settled on Friday at their lowest in three weeks as global trade concerns and expectations of more oil supply from Venezuela weighed. Venezuela's state-run oil company PDVSA is getting ready to resume work at its joint ventures under terms similar to Biden-era licenses, once U.S. President Donald Trump reinstates authorisations for its partners to operate and export oil under swaps, company sources said. Though prices were up slightly on Monday, the prospect of OPEC+ further easing supply curbs limited the gains. A market monitoring panel of the Organization of the Petroleum Exporting Countries and their allies is set to meet at 1200 GMT on Monday. It is unlikely to recommend altering existing plans by eight members to raise oil output by 548,000 barrels per day in August, four OPEC+ delegates said last week. Another source said it was too early to say. The producer group is keen to recover market share while summer demand is helping to absorb the extra barrels. JP Morgan analysts said global oil demand rose by 600,000 bpd in July on year, while global oil stocks rose 1.6 million bpd. In the Middle East, Yemen's Houthis said on Sunday they would target any ships belonging to companies that do business with Israeli ports, regardless of their nationalities, as part of what they called the fourth phase of their military operations against Israel over the Gaza conflict.
Reuters
an hour ago
- Reuters
China's rebound has a distinct cool factor: Taosha Wang
HONG KONG, July 28 (Reuters) - The first seven months of 2025 have delivered a whirlwind of news on Chinese technology and business, oscillating between anxiety and euphoria, but what has cut through the noise has been the emergence of a "cool factor". In January, TikTok suspended its U.S. services for one day, when the outgoing administration shut down the app due to its ties to China, before the decision was swiftly reversed by the incoming Trump administration. Days later, Chinese artificial intelligence company DeepSeek shocked the world with its cost-effective, high-performance R-1 reasoning model, triggering an intense debate about who will lead the 'AI race'. And then in early May, U.S.-China tensions reached unprecedented heights, as tariffs jumped above 100%, effectively halting bilateral trade, before de-escalation. By summer, however, China was once again exporting critical rare earth to the U.S. and Nvidia had re-started the sales of its AI chips to China, suggesting a burgeoning trade detente between the world's two largest economies. Amid this volatility, China's capital markets have responded favorably. The MSCI China Index has surged around 25% year-to-date through July 25, outpacing the MSCI All-Country World index's 12% gain and the S&P 500 index's 9% rise. Notably, this strong performance has been driven not just by typical business-cycle fluctuations, but also an appeal rooted in innovation, collaboration and youth culture, suggesting China's next growth cycle could look very different from those in the past. China's evolution from low-cost imitator to global innovator is epitomized by its electric vehicle dominance. Chinese EV leader BYD, which began as a battery maker and currently has a market cap of $150 billion, was once dismissed by Elon Musk for its unattractive products and weak technology. However, a decade of development, supported by state-backed infrastructure including China's 10-million-strong charging network, has propelled BYD past Musk's Tesla in global sales. In 2024, one of every five EVs sold globally was from BYD, whose market share is now double that of Tesla's. Moreover, BYD's vehicles, like many other Chinese EVs, now boast the type of sleek designs and novel amenities associated with its U.S. rival. Beyond product innovations, some Chinese companies are also experimenting with new business models and sales strategies. For example, livestream social shopping, which was pioneered by Alibaba, has been adopted by Amazon, Instagram, YouTube and even Walmart (in collaboration with TikTok) in the U.S. to target Gen-Z and millennial shoppers. New players like Chinese toymaker Pop Mart are also experimenting with fresh business models. Its designer toys are sold in mystery boxes, where sealed packages conceal randomized plush "Labubu" figures, which adorn the luxury handbags of many influencers. This strategy seeks to tap into the thrill of uncertainty, creating viral demand beyond the Chinese domestic market. And this appears to be working. Pop Mart's sales from outside mainland China contributed to nearly 40% of its total revenue in 2024, and its profit in the first half of 2025 is expected to soar by at least 350% year-over-year. Historically, tensions surrounding intellectual property have dogged China's global trade relationships. Today, however, its embrace of open-source collaboration appears to signal a profound shift. China is now the fastest-growing and second-largest contributor of open-source code on GitHub, the world's leading platform for software collaboration. Moreover, Chinese tech giants like Huawei and Tencent rank among the top corporate sponsors of Apache and Linux foundations, major nonprofit organizations that shape foundational technologies like artificial intelligence and cloud computing. DeepSeek's R-1 model exemplifies this strategy. Released under the permissive MIT license, it grants large-scale commercial reuse rights (unlike Google's Apache 2.0 or Meta's Llama licenses) and has fueled countless derivative models globally. Such openness has the potential to build developer loyalty, influence AI standards, and circumvent geopolitical friction. This shift has been underpinned by a focus on developing scientific prowess. In 2024, China led the world in high-quality research publications, according to Nature, holding the top spot for the second consecutive year. Its advantage in publications extends even to semiconductor design and fabrication, a field where U.S. technological superiority is often assumed, with Chinese scholars authoring over half of the most-cited papers in this field in 2024. However, the outlook for the country's businesses is not all rosy. Industrial profits are still shrinking, falling 1.1% year-to-date, despite various government stimulus measures, including a recently expanded consumer subsidy scheme and a central bank-backed initiative for state-owned enterprises to buy unsold homes. And price wars in sectors such as EVs and food delivery have gotten so brutal that the authorities have stepped in to mediate 'irrational' competition. Another structural issue is the country's stubbornly high youth unemployment rate (16-24-year olds excluding students), which remained at 14.5% - well above the 5% rate for the labor force as a whole. If China's future growth is to be driven more by a 'cool' factor, then the career prospects of its youth need to be strong enough to support their distinct consumption preferences as well as their entrepreneurial endeavors. Regardless of these challenges, innovation and open collaboration still have the potential to reshape China's global identity. Importantly, economic growth driven by these factors may be more evenly distributed and idiosyncratic, and therefore less cyclical, compared to China's old economic engines of real estate, infrastructure and production capacity investments. No longer just the world's factory, China is becoming a source of culturally resonant innovation. And as America's track record over the past decades suggests, no one should underestimate the value of cool. (The views expressed here are those of Taosha Wang, a portfolio manager and creator of the 'Thematically Thinking' newsletter at Fidelity International). Enjoying this column? Check out Reuters Open Interest (ROI),, opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI,, opens new tab can help you keep up. Follow ROI on LinkedIn,, opens new tab and X., opens new tab
