INTEL TRIMS MASSIVE LOSSES, BUT FUTURE OF CHIPMAKING UNIT REMAINS IN LIMBO AMID ONGOING STRUGGLES
The financial prognosis for Intel, once a tech behemoth and the world's largest manufacturer of computer microprocessors, appears alarming but not without slivers of optimism. The news of the company wrapping up 2024 with a significant quarterly loss of $126 million on $14.3 billion revenue came as a blow to the sector. To put it in perspective, the fact that this represents an improvement from a disastrous former loss of $16.6 billion is worth noting.
Despite these improvements, it is evident that Intel’s primary businesses continue to grapple with turbulence. The company's chipmaking foundries, under scrutiny recently, lost a hefty $13.4 billion across the year. The persistent losses raised conjectures about Intel possibly decoupling its chipmaking businesses—a move following the departure of former CEO Pat Gelsinger.
Co-CEO Michelle Johnston Holthaus, however, remained noncommittal on the possibility of spinning out or retaining the foundries. Instead, she underscored the importance of steadily improving these underperforming units. The positive impact of this strategy is already visible with the foundry business gradually gathering momentum — their losses shrank to $2.3 billion last quarter and are forecasted to recede further next year.
A key area of concern and, perhaps, an opportunity for Intel lies in the Artificial Intelligence (AI) chip market. Holthaus conceded to Intel’s faltering performance in this competitive market, especially in erecting AI data centers. Consequently, the company has dropped its ambitious AI chip project, Falcon Shores, and redirected resources towards optimized utilization.
The future, it seems, will be hinged snugly on Intel’s next opus, the Jaguar Shores — a scalable, system-level solution poised to undercut its Nvidia AI competition through competitive pricing strategy. At the end of a year marked by financial turbulence, Intel reported a loss of $18.76 billion against $53.1 billion revenue, prompting a major organizational overhaul leading to a layoff of 15,000 employees.
Despite the upheaval in leadership and strategic realignment, Intel remains dedicated to its graphics businesses. With its interim co-CEOs steadfastly backing this commitment, the future course hinges significantly on the selection of the next permanent CEO.
While alarming, this turbulence could serve as a well-needed wake-up call for Intel. The reorganization and consolidation of projects hint at a more focused approach to compete in rapidly growing sectors such as AI. The future, although unpredictable, will undoubtedly provide invaluable insights into whether these measures will yield the desired turnaround in Intel's fortunes, setting a precedent in managing crisis within tech giants.