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The Hill
30-07-2025
- Business
- The Hill
Intel's Ohio plans hinge on finding new customers
NEW ALBANY, Ohio (WCMH) — Intel announced it will need to get external customers for its manufacturing division, or it may need to stop all work in Ohio. Last week, Intel announced it is further slowing construction at its $28 billion manufacturing site in Licking County. Intel also said if it is unable to find external customers for a new manufacturing technology, it will likely have to stop all work in Ohio. The technology is called 14A and won't debut until 2027, so Intel will have some time to try and acquire the customers it needs. See previous coverage of Intel's slowed construction in the video player above. Why is 14A such a big deal to Ohio? To understand 14A's importance, it's crucial to first understand how Intel works. Intel is largely split into two divisions: Intel Products and Intel Foundry. Products is in charge of inventing and marketing physical goods, and Foundry is in charge of manufacturing those goods. Intel largely looks at them as two separate companies that both play a role in making semiconductors. Semiconductors are small, about the size of your fingernail, and incredibly difficult to manufacture. Intel Foundry is tasked with figuring out the best methods, called process nodes, of making them. Nodes are like recipes that detail thousands of steps and precise ingredients that Intel will use to manufacture a semiconductor chip. Nodes are evaluated based on power, performance and how much area is needed for silicon. The best node will use less power and area while maximizing performance at a low cost. 14A is Intel's newest node and is still in development, but the company has high hopes for it. Intel Foundry makes its money by marketing these 'recipes' to customers. Foundry's largest customer is Intel Products, but the company said it will need other customers if it is going to keep the Foundry business afloat. In its Q2 fiscal results, Intel was honest that it would likely have to stop all operations in Ohio if it could not secure external customers for 14A. Will Intel be able to get those customers? Intel CEO Lip-Bu Tan is hopeful the company will secure external 14A customers, but it will require a lot of trust. So far, the company has been largely unsuccessful in attracting outside clients, and even Intel Products sometimes uses external manufacturers rather than Intel Foundry. Although Intel sees Products and Foundry as different entities, it's hard to convince other companies to feel the same. Intel Products is a direct competitor to all of the companies that Intel Foundry hopes to contract with. From the outside, it's easy for other companies to just see Intel, the name of their competition, and turn elsewhere for manufacturing. Other customers could worry Intel won't prioritize their business over internal manufacturing, or have difficulty trusting an apparent competitor with their product secrets. Lancaster dog boarder severely damaged by flood Tan plans to fix this by emphasizing trust and learning from what did not work with the process nodes Intel already has. He said the company's history as a leader in the tech industry allows them to still be competitive as a manufacturing business. Since taking on the role of CEO in March, Tan has met with dozens of Intel customers to hear what the company can do better. Intel representatives told NBC4 they are still committed to the Ohio One plant. Intel is already scaling down Foundry operations, including slowing construction in Ohio, as Tan realigns the Foundry to be reactive to market needs instead of proactive. Tan said Intel will only invest in Foundry expenses if there is a clear market for them going forward, including Ohio's plant. What if Intel can't get the customers? Without external 14A customers, Intel said it will 'likely' stop all Ohio operations as part of a larger deconstruction of the Foundry. This decision would be expensive; Intel said there are only two other semiconductor manufacturing companies that could develop the products they need, and relying on third parties would be pricy. Getting out of the promises made in Ohio and other states would be even more expensive. Intel estimated it has invested over $100 billion in property and equipment at its Foundry sites that it could lose out on. It would also likely have to pay Ohio and the federal government back for monetary incentives it received to build semiconductor chips in New Albany, which could cost billions. In November 2024, Intel signed an agreement with the U.S. Department of Commerce for an award of $7.9 billion, $1.5 billion of which was supposed to go to Ohio. The money came from the bipartisan CHIPS Act, which allocates funding to promote domestic semiconductor manufacturing. Despite the agreement, Intel said it has not received CHIPS Act payments it has submitted for reimbursement. To date, Intel has received $2.2 billion, all of which appeared to be paid before President Donald Trump, a CHIPS Act critic, took office. Intel said between April and July, it submitted claims for $850 million of CHIPS Act funding, but has received none of it and is uncertain if it will come at all. Intel stopped or combined nearly all of its other Foundry expansion projects in other countries, but has repeatedly affirmed its commitment to Ohio. With 14A unavailable for the next two years, it seems most likely Ohio's construction will slowly continue until 14A's future is made clear. Intel has not announced an updated timeline with slowed construction.
Yahoo
25-07-2025
- Business
- Yahoo
Intel Corp (INTC) Q2 2025 Earnings Call Highlights: Revenue Surpasses Expectations Amid ...
Revenue: $12.9 billion, above the high end of guidance. Non-GAAP Gross Margin: 29.7%, impacted by $800 million in non-cash impairment and $200 million in one-time period costs. Non-GAAP EPS: Minus $0.10, excluding charges would have been $0.10. Operating Cash Flow: $2.1 billion. Adjusted Free Cash Flow: Negative $1.1 billion. Cash and Short-term Investments: $21.2 billion. Intel Products Revenue: $11.8 billion, slightly up sequentially. CCG Revenue: Up 3% quarter-over-quarter. DCAI Revenue: Down 5% sequentially. Intel Foundry Revenue: $4.4 billion, down 5% sequentially. Operating Profit for Intel Products: $2.7 billion, 23% of revenue. Intel Foundry Operating Loss: $3.2 billion, down $848 million sequentially. All Other Revenue: $1.1 billion, up 12% sequentially. Q3 Revenue Guidance: $12.6 billion to $13.6 billion. Q3 Gross Margin Guidance: Approximately 36%. 2025 OpEx Target: $17 billion. 2026 OpEx Target: $16 billion. 2025 Gross Capital Investment: Approximately $18 billion. Net CapEx Forecast: $8 billion to $11 billion for 2025. Warning! GuruFocus has detected 7 Warning Signs with INTC. Release Date: July 24, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Intel Corp (NASDAQ:INTC) reported Q2 revenue above the high end of its guidance, reflecting strong demand across its business. The company is making progress on its foundry strategy, focusing on building trust with customers and ensuring high-quality, reliable wafer delivery. Intel Corp (NASDAQ:INTC) is committed to improving its balance sheet, with actions taken to reduce operating expenses and improve execution. The company is focused on launching its Panther Lake SKU by year-end, which is expected to solidify its strong share in the notebook market. Intel Corp (NASDAQ:INTC) is actively engaging with external ecosystem partners to improve yield and performance targets for its Intel 18A technology. Negative Points Headline profitability was impacted by several one-time items and impairments, affecting overall financial performance. The company faces challenges in the high-end desktop market and needs to improve its position in broader hyperscale workloads. Intel Corp (NASDAQ:INTC) has decided not to continue with manufacturing projects in Germany and Poland, indicating potential setbacks in its expansion plans. The company recognized approximately $800 million of non-cash impairment and accelerated depreciation charges related to excess prior generation tools. Intel Corp (NASDAQ:INTC) is experiencing capacity constraints in Intel 7, which are expected to persist through the second half of the year. Q & A Highlights Q: Lip-Bu, how fast can you fix the x86 side of the business to build trust for the foundry business? A: Lip-Bu Tan, CEO: We are focusing on the 18A technology, with steady progress on yield and performance targets. The engagement with external ecosystem partners is helping us improve, and we are confident in launching our Panther Lake SKU by year-end. Building trust with customers involves demonstrating reliability and delivering on time and at scale. Q: Dave, can you elaborate on the reasons for the sequential decline in gross margin guidance and the outlook for next year? A: David Zinsner, CFO: The main driver is the ramp of Lunar Lake, which impacts gross margins due to the cost structure. Panther Lake's early-stage maturity also contributes to higher costs. However, as yields improve and volumes increase, we expect this to become a tailwind. Foundry gross margins are expected to expand next year, and product cost structure improvements will also help. Q: Lip-Bu, how do you address concerns about the 14A development and its impact on the foundry strategy? A: Lip-Bu Tan, CEO: We are focused on building the foundational technology for 14A and engaging with customers early in the process. We are committed to the foundry business but will only invest in CapEx when we see customer volume commitments and performance milestones met. This disciplined approach ensures we deliver reliable results to our customers. Q: Dave, what is the outlook for CapEx next year, and how much can you reduce it? A: David Zinsner, CFO: We expect CapEx to decrease next year as we digest previous investments. While maintenance CapEx is about half of our current level, we anticipate spending more than $9 billion but less than $18 billion. We will finalize our CapEx plans in early 2026. Q: Lip-Bu, can you expand on Intel's AI strategy and how it plans to compete in the market? A: Lip-Bu Tan, CEO: We are focusing on inference and agentic AI, aiming to provide a full stack solution from system software to silicon. We plan to leverage our x86 franchise and explore new architectures, including working with startups and system companies for purpose-built AI platforms. We will share more details on our strategy in the coming months. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
06-06-2025
- Business
- Yahoo
Intel draws a line in the sand to boost gross margins — new products must deliver 50% gross profit to get the green light
When you buy through links on our articles, Future and its syndication partners may earn a commission. Intel will not be entertaining any projects that do not promise to double its money going forward. Michelle Johnston Holthaus, CEO of Intel Products, announced at Bank of America's global technology conference that Intel is no longer approving new projects that cannot be proven to earn at least 50% gross margin "based on a set of industry expectations." Holthaus explained Intel's new risk-averse policy as "something that we probably should have had before, but we have it now so that product doesn't move forward; you actually don't get engineers assigned to it if it's not 50% or higher gross margins moving forward." Holthaus also clarified that while Intel is not expecting or projecting 50% gross margins across all operations, it is a number the company is aspiring toward internally. All of Intel's future roadmap operations, including Panther Lake and Nova Lake, are also currently expected to reach the 50% gross profit number that the rest of the business aspires to. The drive behind this initiative is reportedly coming from Intel's new CEO, Lip-Bu Tan. Tan is reportedly "laser focused on the fact that we need to get our gross margins back up above 50%." To accomplish this, Tan is also said to be investigating and potentially cancelling or changing unprofitable deals with other companies. Intel's margins have slipped to new lows for the company in recent months. MacroTrends reports Intel's trailing 12 months gross margin for Q1 2025 was as low as 31.67%. Intel's gross margins had hovered around the 60% mark for the ten years leading up to the COVID-19 pandemic, falling beneath 50% in Q2 2022 and continuing to steadily fall ever since. Holthaus predicts a "tug-of-war" to ensue within Intel in the coming months as engineers and executives reckon with being forced between a rock and a hard place. "We need to be building products that... fit the right competitive landscape and requirements of our customers, but also have the right cost structure in place. It really requires us to do both." CEO Lip-Bu Tan has done much to streamline Intel's operation and right a rocking ship inherited from previous Intel chief Pat Gelsinger. Another major round of layoffs, potentially up to 20% of the remaining workforce, is coming in Q2, arriving after a major leadership change-up to remove middle management between Tan and other team leads. Tan is also quoted as wanting to turn Intel into an "engineering-focused company" again under his leadership. To reach this, Tan has committed to investing in recruiting and retaining top talent; "I believe Intel has lost some of this talent over the years; I want to create a culture of innovation empowerment." Maintaining a culture of empowering innovation and top talent seems, on its face, at odds with layoffs and a lock on projects not projected to gross 50% margins, but Tan seemingly has Intel investors on his side in these pursuits. Follow Tom's Hardware on Google News to get our up-to-date news, analysis, and reviews in your feeds. Make sure to click the Follow button. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Intel executive explains why Ohio plant will need to fight for Intel's business
COLUMBUS, Ohio (WCMH) — CEO of Intel Products Michelle Johnston Holthaus said Tuesday she is considering manufacturers outside of Intel Foundry, the not-yet-profitable division responsible for Ohio's major Intel plant, when creating Intel's products. 'Obviously, I'm very happy with the Foundry and how far they've come along,' Holthaus said. 'But one thing that I constantly have a conversation about internally is that sometimes an Intel Foundry is going to make sense for my products and sometimes it will not.' Intel has two primary internal divisions, Intel Products and Intel Foundry. Intel Foundry manages the manufacturing side of Intel, including Ohio's $28 billion plant, which is currently under construction. Intel Products manages processers, server products and other goods the company sells. Intel Products are often made through Intel Foundry, although both also accept outside business. Property taxes, Browns' stadium among Senate budget talks For example, Holthaus said, one new product is being manufactured through both Intel Foundry and Taiwanese semiconductor leader TMSG. She said she prioritizes making the best product over working internally, and using multiple foundries allows her to optimize products because different foundries excel in different ways. She said right now, Foundry collaboration is around 70% Intel and 30% external. In theory, this generates less business for Intel semiconductor plants like the one being built in New Albany. However, selling more products drives profits for Intel, which could be used to support projects like Intel Ohio One. Holthaus also said Intel Foundry will need to find another major customer outside of Products to prove its profitability and justify expenses like Ohio's construction. However, she said she thinks the Foundry is well-positioned and she is confident in where it will end up. Intel has undergone a number of changes this year, which Holthaus was hopeful about. Holthaus said new CEO Lip-Bu Tan is very transparent about his many conversations with customers and lets employees know what is and isn't working. She said part of these conversations is connecting with Intel Foundry possible customers who decided against working with Intel Foundry to understand where the concerns and hesitations are. 'I think employees are very optimistic about how he (Tan) can help us,' Holthaus said. Ohioans can soon buy over twice as much non-medical marijuana Holthaus said despite encouraging moves, there is a lot of uncertainty right now in the market, especially because of tariffs. Starting Wednesday, Trump announced increased tariffs on steel and aluminum, and Holthaus said Intel and others in the market are cautiously waiting to see how else tariffs will affect the semiconductor industry. Holthaus said if need be, they can shift operations around globally and allow them to pivot. She said the company is prioritizing what customers want above all, and are optimistic that enough of their scenarios will be able to be implemented that they can adjust appropriately. 'We have a whole team that's doing a variety of scenario planning,' Holthaus said. 'I don't think in any one scenario planning they picked all the right lotto numbers, but ' Holthaus did not address Intel's incoming layoffs, which Bloomberg reported could hit at least 20% of workers. Although an exact number is not yet confirmed, Tan has announced large layoffs will occur by the end of July. See previous coverage of these layoffs in the video player above. Holthaus was co-interim CEO of Intel before it selected Tan to head the company in March, and she appeared less convinced then her co-CEO of Intel Foundry's place. As head of Products, she described herself as Foundry's largest wager customer. She said she was confident the Foundry will succeed, but it will need to prove itself. 'As CEO of Intel Products, I will always make process technology decisions based on what is best for my customers,' Holthaus said in January. 'And Intel Foundry will need to earn my business every day, just as I need to earn the business of my customers.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Sign in to access your portfolio
Yahoo
26-04-2025
- Business
- Yahoo
Intel's elderly Raptor Lake CPUs are still selling surprisingly well and the reason is simple: They're cheap
When you buy through links on our articles, Future and its syndication partners may earn a commission. Given they're over two and half years old and plagued with reliability concerns, you might be surprised to learn that Intel's Raptor Lake CPUs are selling like high-temperature baked comestibles. That's according to Intel itself in its latest earnings call for investors. Raptor Lake refers to Intel's 13th and 14th Gen CPUs for mobile and desktop. Michelle Johnston Holdhaus, CEO of Intel Products, explained that cost is the driving factor behind the ongoing success of these chips, which first went on sale in October 2022, a relative age ago by the standards of computer chips. "We're not pushing the old parts based on margins. What we're really seeing is much greater demand from our customers for N minus one and N minus two [referring to the two previous generations of CPUs before Intel's current Arrow Lake, meteor Lake and Lunar Lake processor families] products, so that they can continue to deliver system price points that consumers are really demanding. As we've all talked about, the macroeconomic concerns and tariffs have everybody kind of hedging their bets in what they need to have from an inventory perspective. And Raptor Lake is a great part," Holdhaus says. She also emphasised that Intel's newer Meteor Lake and Lunar Lake CPUs, "come with a much higher cost structure." While Holdhaus didn't say so specifically, calling out Meteor Lake and Lunar Lake, which are both exclusively offered in mobile format, but not mentioning Arrow Lake, which is available as both a desktop and a laptop CPU, suggests that it's Raptor Lake chips for laptops that have been selling surprisingly well, late into the generation's life cycle. That said, it's worth remembering that Raptor Lake's long sales tail isn't entirely novel. When a new generation of CPU is launched, it doesn't immediately replace its predecessor in its entirety. At any one time, Intel will be manufacturing several generations of chips in parallel. As a new generation arrives, it will gradually ramp up in volume, while numbers produced of its predecessors may be maintained for a time before eventually tailing off. That's especially true if the latest generation is based on a new silicon node, which itself needs to be ramped up before sufficient volumes can be produced to fully replace older generations of chips. To put this all into context, Intel is in fact still producing CPUs from the even older Alder Lake generation, which went on sale in November 2021. Intel stopped taking orders for Alder Lake CPUs in January, but said production would continue until 23 January 2026. So, you might expect Intel to keep making Raptor Lake CPUs until early 2027. Of late, that ramp-and-replace cadence has become more complex thanks to Intel moving some of its production to the Taiwanese chip foundry TSMC. Raptor Lake is built on Intel's internal Intel 7 node and built from a single chip or silicon die. Meteor Lake, Lunar Lake, and Arrow Lake, by contrast, are all chiplet designs made of multiple dies, or tiles in Intel parlance. Lunar Lake and Arrow Lake logic chiplets are made entirely by TSMC, while Meteor Lake CPUs are mostly made by TSMC, but with the Intel 4 process used for the die containing CPU cores. Your next upgrade Best CPU for gaming: The top chips from Intel and gaming motherboard: The right graphics card: Your perfect pixel-pusher SSD for gaming: Get into the game ahead of the rest. Certainly, if you browse the websites of many big laptops brands, you'll still find plenty of laptops with Intel H series Raptor Lake CPUs, such as the Core i7-13620H. It tends to be mainstream products offered at lower price points which use the older chips, just as Intel implies. Laptops with higher price tags that offer either extreme performance or ultra-slim form factors are more likely to use the latest chips, which deliver either more grunt or better efficiency. Likewise, if we are indeed talking about laptops exclusively, then the well-documented issues suffered predominantly by desktop members of the Raptor Lake generation are by definition less relevant. Sign in to access your portfolio
