News Intel 1Q23 Earnings

[Hitman928]

Creating this thread in preparation of Intel announcing 1Q23 results.

While we wait, here is a report/rumor (no idea of the credibility) that Sapphire Rapids demand is way below expectations and that the, "supply chain" is cutting SPR orders by up to 50%. Specifically, MS is called out as cutting SPR orders for 2H23 by 50%-70% and that MS plans on a large Ampere (ARM based) CPU purchase early next year. Intel had indicated that they expect a recovery in business in 2H23 so it will be interesting to see if their commentary on this has changed at all.

https://twitter.com/x/status/1650522019371405317

Other semicon and electronics companies have started reporting results indicating significant weakness. Texas Instruments had a luke warm report and actually indicated that they see some difficult market conditions in 2H23 (link). Samsung reporting demand continues to be soft and their profits were demolished for the quarter, but inventory is starting to clear for finished products and they do expect an uptick in demand in 2H23 due to cleared out inventory and new models being introduced (link). TI and Samsung play in a different area than Intel, but it is still interesting to see what they are experiencing to get a more macro view of things.

EETimes is also reporting that Nvidia is at an historically high inventory level (~225 days of inventory vs historical industry average of 92 days). AMD is reportedly at ~125 days.

Lastly, as a refresher, during their 4Q22 earnings, Intel gave a 1Q23 forecast revenue of $10.5 billion to $11.5 billion and first-quarter EPS of $(0.80) (non-GAAP EPS of $(0.15)).


Overall, things are tough as expected and not just for Intel. At the same time, Intel is in about as vulnerable position as they've been in decades. Hopefully Gelsinger brought a bailing bucket and a strong steering hand as these are some very rough waters they are navigating.

Edit:

Results not as bad as expected:

 

[jpiniero]

Having to cut SPR's presumably low volume is pretty brutal.

 

[jpiniero]

https://d1io3yog0oux5.cloudfront.net/_b67ed4d8c17197972c955fd107959e3b/intel/db/887/8943/earnings_release/Q1+23_EarningsRelease+%28004%29.pdf

It's a little better than expected? Loss of 2.8 billion.

 

[Hitman928]

Having to cut SPR's presumably low volume is pretty brutal.

I would take it as just a rumor for now but yes, it would be a brutal blow if true.

 

[Hitman928]

Forecast for Q2 still really rough but again, not as bad as expected. Will look forward to the earnings call to hear if they plan on returning to making a profit in the second half of the year.

 

[Hitman928]

Segment breakdown:



Only Mobileye is decently profitable. CCG had a very small profit and the rest lost money.

 

[Vattila]

Can you believe it? Intel's data centre business is no longer generating operating profits, with margins 14% under water. I wonder how much is lost unit volume vs discounts and loyalty schemes to keep customers from defecting to the competition.

 

[coercitiv]

Can you believe it? Intel's data centre business is no longer generating operating profits, with margins 14% under water.

It feels like yesterday they didn't have enough capacity to meet demand.

 

[Abwx]

They are still on a 50bn/year course, and given the current economic turmoil that s not bad numbers overall, silicon sales are very low currently and Q1 is traditionaly an hollow period.

FI Samsung manufacturing side has made 3bn loss in Q1 while Hynix does no more benefit from inflated prices and is down 50% yearly for revenue.

We ll have to wait for other firms numbers to have an acurate idea, the only bad number eventually is datacenter where they surely lost some marketshare to AMD.

 

[Saylick]

Market doesn't seem to know what to think about the results given they are bad, but not terrible.

 

[AdamK47]

They still beat expectations.

• Revenue: $11.7 billion versus $11.1 billion expected
• Adj. loss per share: $0.04 versus $0.15 expected
• Client Computing: $5.8 billion versus $4.9 billion expected
• Datacenter and AI: $3.7 billion versus $3.5 billion expected

 

[A///]

Market doesn't seem to know what to think about the results given they are bad, but not terrible.

View attachment 80056

at time of presentation the market had closed because it goes by eastern time, and after hours are hard to go by given the 180s i ve seen over the years on next biz day openings. this steaming turd pile served on a thursday isn't great because it gives them the chance to experience a blood bath tomorrow and monday whereas if it was on a friday most traders would shrug it off by the time monday came along and they had their cool down period.

intel's competitor being on a tuesday next week is the worst of the prior 2 options if their outlook is awful, too. this is all expected to be honest. intel and their competitor will have to release very compelling hardware for anyone who bought during the pandemic to drop their current hw and buy it anew in the consumer market where discretionary spending can be normal or large. biz or dc or hyperscalers have set budgets.

despite all this I want Gelsinger to stay. if the board oust him it'll be a monumentally stupid decision. it's bad now, it may get worse, but every company is suffering. people are suffering. you can't have good times without the bad times. even if gelsinger's zingers have aged like milk in the gobi desert.

but most importantly it's fun to write out Pat "Guns A'blazing Gunslinger" Gelsinger every so often because he and intel are routing themselves like a zany spaghetti western.

 

[jpiniero]

Intel did say they gained client market share.

 

[A///]

claims like that make no sense unless they're tracking every processor in active use. a privacy nightmare. to me that language has always been that a large amount of biz retired their hardware and bought anew leading to that share increase.

plenty of amd laptops out there but the windows based laptops I want often seem to be intel based only. sadly there is no laptop maker that makes laptops or mini computers with a full diy on approach that allows you to update as you go rather than everything at once, or those stupid boneheaded decisions to solder everything onto the damned board.

 

[mderbarimdiger]

intel is promising again the future, but this time we are getting closer and they have not yet been stepping back from any promise, to the contrary they are showing even more optimism, intel 4 ramping starting today, significant updates to intel 3/20/18 within next 2 months, backside power delivery is functioning well, 18A being tested by several clients, this are several exciting stories if you are willing to raise your eye and look to the future of intel, and by now its hard to mock this all as hyperbole distraction tactics from intel, they use marketing words like all companies do, but their claims must be true or they would be blatant outright liars.

​

excerpts from the earnings call transcript, thanks to Daniel Nenni from semiwiki (among the best places to see updates in the semi filed)

"Relative to five nodes in four years, notably, two out of these five nodes, Intel 7 and Intel 4, are now essentially done. Intel 7 is in high-volume manufacturing, and Meteor Lake on Intel 4's ramp in production wafer starts today for a second-half product launch"

"We are quickly mastering EUV technology with Intel 4 as our first EUV node. As we focus on the next three nodes, Intel 3 is on track and we highlighted in our recent DCAI webinar, Sierra Forest will begin shipping in the first half of '24, with Granite Rapids shortly thereafter, both on Intel 3."

"We also have significant milestones planned in Q2 for Intel 3, Intel 20A and Intel 18A, and look forward to providing more details as we execute. Overall, we are squarely on track to deliver five nodes in four years. We understand that our foundry ambitions will not be realized overnight, building a vibrant foundry ecosystem will take time. But we also understand our foundry success is vitally important to establishing a geographically diverse and secure supply of semiconductors."

"We took a major step forward in building our ecosystem this month when we announced a multi-generation agreement with Arm Holdings. This will enable chip designers to build leading-edge mobile SoC designs on Intel 18A, giving the design community a new foundry alternative for product innovation and fast time-to-market, while also opening up new options and approaches for large ecosystem of Arm customers."

"And with Intel 3, the positive updates that we've given on Granite and Sierra Forest for next year, the volume sampling that I've already referred to gives us a lot of confidence that, that is now coming along very nicely. Both Intel 4 and Intel 3 are EUV nodes. As you say, as we go to 20A and 18A, the two major innovations are the RibbonFET, the gate all around transistor architecture and the backside power."

"Given the uniqueness of the backside power, as you indicated, we had an internal node that we didn't expose to products or externally to derisk that node, and that went extremely well. We had very good results from the backside power, the power delivery, the routability improvements that gave. And as I was -- as one proof point of that -- the Arm announcement was one that demonstrated significant benefits of backside power that we were able to do."

"So 20A and 18A are the next ones up. 20A will be primarily a client node as we ramp our Arrow Lake products in '24 and '25. 18A will be everything. We will have server products, client products, networking products and many foundry products. We also noted that this was the quarter that we have our first foundry test chips coming out. And so some of the test chips for external customers on 18A are now popping out a fab and being tested by them."

"So good affirmation from them, you also mentioned, I think it's actually a very insightful question, Matt, the cost structure. And one of the things that we've put a lot of emphasis on with 18A is getting to structural cost parity with what we believe is the best in the industry at that point. So, we view this as not just getting to power and performance parity, but also area parity and cost structural parity as we get to 18A."

"And we believe, as we've benchmarked ourselves against the industry best, we believe we're on track to do that in the 18A timeframe. And that's part of why we talk about in the internal foundry model as being able to start really measuring the P&L right? I'm really viewing it as the industry price for wafers is understood, and we have to benchmark ourselves against that and deliver margin structure at the wafer level that's competitive with that."

 

[jpiniero]

intel is promising again the future, but this time we are getting closer and they have not yet been stepping back from any promise, to the contrary they are showing even more optimism, intel 4 ramping starting today, significant updates to intel 3/20/18 within next 2 months, backside power delivery is functioning well, 18A being tested by several clients, this are several exciting stories if you are willing to raise your eye and look to the future of intel, and by now its hard to mock this all as hyperbole distraction tactics from intel, they use marketing words like all companies do, but their claims must be true or they would be blatant outright liars.

This is the same company that claimed that "10 nm is on track!!!" multiple times, only to delay because yields were extremely crappy.

The main difference now is that they might actually go ahead with shipping products with nodes that have extremely crappy yields.

 

[A///]

This is the same company that claimed that "10 nm is on track!!!" multiple times, only to delay because yields were extremely crappy.

The main difference now is that they might actually go ahead with shipping products with nodes that have extremely crappy yields.

That's half of it, the other half is they tried to bite too much of their sandwich and couldn't properly chew or swallow their bite. Intel's aggressive behavior set them back several years.it's what happens when you let moron bean counters dictate everything.

 

[Vattila]

Here is the instant overview:

And here is the earnings call transcript:

Intel Corporation (INTC) Q1 2023 Earnings Call Transcript

Intel Corporation (INTC) Q1 2023 Earnings Conference Call April 27, 2023, 05:00 PM ET

seekingalpha.com

 

[A///]

Here is the instant overview:

am I reading this correctly? $100m for ifs?

 

[Doug S]

This is the same company that claimed that "10 nm is on track!!!" multiple times, only to delay because yields were extremely crappy.

The main difference now is that they might actually go ahead with shipping products with nodes that have extremely crappy yields.

Still skeptical because of that history of lying, but since they have real foundry customers this time around hopefully that will keep them honest about their claims. It would be good to see TSMC have some competition, and it has become obvious Samsung is not going to provide that competition.

 

[Tuna-Fish]

am I reading this correctly? $100m for ifs?

From Intel's earnings release:

Intel Foundry Services (IFS) $118 million

 

[jpiniero]

claims like that make no sense unless they're tracking every processor in active use. a privacy nightmare. to me that language has always been that a large amount of biz retired their hardware and bought anew leading to that share increase.

By market share they mean processors sold in the quarter. I'm sure they have ways of finding that out.

 

[jpiniero]

Intel said in the 10-Q that desktop volume was down 32% and Notebook volume down 37%.

They also said Server Volume was down 50%, lolz.

 

[Tuna-Fish]

They also said Server Volume was down 50%, lolz.

That number alone is actually not catastrophic, because SPR is about to ramp up. It's normal for volume to crater just before a launch, because customers delay orders to get the good stuff.

The catastrophic part is rumors about customers cutting SPR orders. We'll know how that turns out in 3 months.

 

[Vattila]

The catastrophic part is rumors about customers cutting SPR orders.

On the plus side, and part of the reason why Gelsinger is so pleased with Sapphire Rapids — despite losses overall — is that there is an AI revolution ongoing and Sapphire Rapids is part of that, as a component in Nvidia's latest servers. And those are/will be selling very well, presumably. Intel probably doesn't get much per CPU from Nvidia in that deal, since Nvidia had the upper hand in those negotiations, but Intel may get some decent amount of adjacent business. In turn, this may be a headwind for AMD's EPYC, which was part of Nvidia's previous generation servers and got some momentum from that partnership.

Sapphire Rapids also has AI and other accelerators that makes the CPU more attractive than it otherwise would have been for workloads that can benefit.