Intel Corporation announced its financial results for the third quarter of 2024, with a revenue of $13.3 billion, marking a 6% decline compared to the same quarter last year. The company reported its GAAP (Generally Accepted Accounting Principles) earnings per share as -$3.88 and non-GAAP earnings per share as -$0.46 for this period.
In the third quarter results, Intel’s decisions on restructuring and asset impairment played a significant role. The company allocated $15.9 billion for asset impairment and $2.8 billion for restructuring costs as part of its cost reduction strategies. Intel, aiming to achieve a $10 billion cost-cutting target by 2025, stated that it is taking aggressive steps towards this goal.
Intel CEO Pat Gelsinger indicated that their cost-cutting and efficiency-boosting strategies yielded positive results in the third quarter. Gelsinger emphasized that efforts to strengthen the x86 product portfolio and the interest in Intel 18A technology show that the company’s cost reduction strategy is on the right track.
Intel CFO David Zinsner expressed that although restructuring costs recorded in the third quarter negatively impacted profitability, these steps were essential to build a stronger financial structure in the long run. During the third quarter, Intel generated $4.1 billion in operating cash and made dividend payments of $0.5 billion per share.
Intel’s gross profit margin was recorded at 15% for the third quarter, while the non-GAAP gross profit margin was 18%. Research and development (R&D) and general administration expenses reached $5.4 billion, marking a 4% increase compared to the same period last year. The company’s operating profit experienced a sharp drop, falling to -68.2%, with a net loss of $16.6 billion recorded.
By product groups, Intel’s Client Computing Group (CCG) revenue was reported at $7.3 billion, reflecting a 7% annual decline. However, revenue in the Data Center and AI (DCAI) group grew by 9% to $3.3 billion, and the Network and Edge (NEX) group achieved a 4% increase with $1.5 billion in revenue. Meanwhile, Intel Foundry revenue declined by 8%, standing at $4.4 billion.
During this period, Intel recorded a significant increase in restructuring and asset impairment costs. Restructuring costs reached $2.8 billion, with $528 million of these expenses being non-cash costs. Additionally, Intel allocated $3.1 billion for accelerated depreciation and impairment charges on certain production assets.
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A goodwill impairment of $2.9 billion was recorded specifically for the Mobileye unit, while a $9.9 billion impairment provision was made for deferred tax assets in the United States. Intel CFO David Zinsner stated that the restructuring steps are aimed at strengthening the company’s long-term profitability and liquidity.
In the third quarter, Intel established the x86 Ecosystem Advisory Group, a joint venture with AMD, to strengthen collaboration with other key technology companies in the industry. This group will work to simplify software development processes, ensure compatibility among different manufacturers, and provide standardized tools for developers.
Additionally, Intel plans to collaborate with IBM to offer the new Intel Gaudi 3 AI accelerators on IBM Cloud. This partnership aims to make enterprise AI solutions more cost-effective and promote innovation.
Intel also announced a multi-year agreement with Amazon Web Services (AWS) to develop a next-generation custom Xeon 6 chip. This chip, built on Intel 18A, will be customized with a new AI fabric for AWS.
Furthermore, Intel secured up to $3 billion in direct funding from the U.S. government’s CHIPS and Science Act for the Secure Enclave program, which aims to strengthen reliable semiconductor manufacturing in the U.S.
Another significant step in Intel’s future plans is the decision to restructure its Intel Foundry Services (IFS) unit as an independent subsidiary. This new structure aims to provide more transparent and independent financial management to Intel’s external customers and suppliers.
For the fourth quarter of 2024, Intel’s financial outlook targets revenue between $13.3 billion and $14.3 billion. GAAP earnings per share are expected to be a loss of $0.24, while non-GAAP earnings per share are anticipated to be $0.12. The gross profit margin forecast is 36.5% on a GAAP basis and 39.5% on a non-GAAP basis.
