Intel is in a good position to benefit from several development vectors given the demand for internationally balanced and robust supply chains and the estimated $200 billion foundry industry by 2030.
Recently, Intel reported negative first quarter results. Results are better on both the top and bottom lines, but the business did not enter the profit trajectory.
In Q1, operating cash flow was $1.8 billion in the red. With $7.0 billion in net capital expenditures, the adjusted free cash flow was $8.8 billion in the negative. The company has paid $1.5 billion in dividends.
The first quarter’s sales of $11.7 billion was $700 million more than Intel’s midpoint forecast.
The gross margin of 38.4% was somewhat below forecast due to higher-than-anticipated inventory buffers brought on by ongoing uncertainty at macro level.
Factory underload costs incurred during the period had a 300 basis point effect on Q1 margins.
The company believes that the PC industry is on track and could reach a sell-through of 270 million units in 2023.
According to Management commentary, semiconductor industry is cyclical by nature.
In order to capitalise on the enormous semiconductor industry growth anticipated over the coming decade—nearly doubling to more than $1 trillion by 2030—Intel is continuing to speed up its transition. Intel is in a good position to benefit from several development vectors given the demand for internationally balanced and robust supply chains and the estimated $200 billion foundry industry by 2030.
Company has stated that it will take time to create a thriving foundry environment. In order to create a reliable and geographically varied supply of semiconductors, Intel’s foundry success is crucial. By signing a multi-generational deal with ARM Holdings earlier in April, Intel made significant progress for developing the same. As a result, chip designers will be able to create cutting-edge mobile SoC designs on Intel 18A, providing the design community with a new foundry choice for product innovation and quick time to market. It will also provide the wide ecosystem of ARM customers more alternatives and strategies.
Intel’s objective is to democratise the amazing power of artificial intelligence by supporting an open ecosystem with a comprehensive suite of hardware and software intellectual property (IP) to push AI from the cloud to the business, network, edge, and client through training and inference, in both discrete and integrated solutions.
The company expects a Q2 gross margin of 37.5%, a tax rate of 13%, and EPS of $0.04 for the second quarter.