Another kind of kitchen sink earnings day from chip giant Intel (INTC).
Shares of Intel rose nearly 7% in aftermarket trading on Thursday, as the struggling American icon managed to outperform expected guidance for the fourth quarter.
“This was a pivotal quarter for us and I think it provides optimism for what’s to come,” said Intel’s CEO Pat Gelsinger told Yahoo Finance shortly after the company’s earnings call ended (video above).
But the market’s initial reaction may be a bit exaggerated when we dive into the quarterly results.
Intel revealed a total of $15.9 billion in non-cash charges related to inventory writedowns and lower performance expectations for certain companies, such as autonomous driving company Mobileye (MBLY), where it owns a majority stake. The company reported an operating loss of $5.8 billion at Intel Foundry – Intel’s new chip manufacturing business – on revenue of $4.4 billion.
Intel took a cautious stance on the health of its foundry business through 2025. On the earnings call, management pledged to continue executing a $10 billion cost-cutting plan, as well as exploring alternative financing sources to support its ambitions in support chip production.
Gelsinger told Yahoo Finance that no deal is imminent in terms of external financing.
He reiterated that Intel will promote the opening of chip factories in states such as Ohio and Arizona, despite not yet receiving billions of dollars in funding from the CHIPS Act.
The Biden administration has earmarked $8.5 billion in direct funding to Intel for its projects, but the company is still waiting for the money while government officials iron out the milestones it must meet.
“Overall, we view the CHIPS Act as a critical thing that we have invested a lot of time and energy into, and as we said on our earnings call, we are disappointed with the time it will take to get this done,” said Gelsinger.
“It has been over two years since the CHIPS Act was passed. And in that period, I’ve invested $30 billion in American manufacturing and we haven’t seen a dollar from the CHIPS Act. This has taken too long, we have to finish it. “
It’s fair to say that Wall Street still sees a bumpy road ahead for Intel.
Intel faces an “uphill battle” to turn itself around and compete with companies like Nvidia (NVDA), AMD (AMD), and Taiwan’s TSMC (TSM), Goldman Sachs analyst Toshiya Hari recently told Yahoo Finance.
He adds that the company will need some time to bring its technology – especially AI chips – on par with its rivals, if at all.
And BofA analyst Vivek Arya struck a cautious tone at Intel in a new episode of the Opening Bid podcast (listen in here).
Gelsinger also clarified the company’s relationship with TSMC to Yahoo Finance.
Reuters reported that Gelsinger made comments early in his tenure at Intel that strained the relationship with the semiconductor manufacturer. In turn, TSMC withdrew a rebate it gave Intel on 3-nanometer wafers.
“They’re a great company. They just created the foundry model, they serve customers extremely well and they serve us well. And Lunar Lake, the AI PC that we talked about, we couldn’t do it without TSMC — they “I have been critical to the success of that project,” Gelsinger said.
“That said, we want to be a large-scale Western foundry, and we think this is critical for the Western world… And finally, I also provide them with some of our advanced equipment. So it’s a complex relationship, but critical for Intel, for TSMC, for the industry,” added Gelsinger, who called TSMC a customer and competitor with whom they have a great partnership.
Intel shares are down 55% year to date.
The merits at a glance
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Net turnover: -6% YoY to $13.3 billion vs. estimate of $13.02 billion
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Sales of client computers: $7.3 billion versus estimate of $7.46 billion
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Data Center and AI Sales: $3.3 billion versus $3.15 billion
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Network and Edge Sales: $1.5 billion versus $1.39 billion
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Mobileye sales: $485 million versus $485.5 million
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Intel Foundry Sales: $4.4 billion versus $4.44 billion
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Adjusted gross margin: 18% vs. 38% estimate
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Custom EPS: -$0.46 (+$0.41 a year ago) vs. estimate of -$0.03
What else caught our attention: guidance for the fourth quarter
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Brian Sozzi is editor-in-chief of Yahoo Finance. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips about deals, mergers, activist situations or something else? Email [email protected].
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