Intel Corporation today reported financial results for the third quarter of 2022.
“Despite deteriorating economic conditions, we delivered solid results and made significant progress with the execution of our products and processes during the quarter,” said Pat Gelsinger, CEO of Intel. “To position ourselves for this business cycle, we are aggressively addressing costs and driving efficiencies across the business to accelerate our IDM 2.0 flywheel for the digital future.”
“As we roll out the next phase of IDM 2.0, we are focused on adopting an in-house foundry model to enable our manufacturing group and business units to be more agile, make better decisions and establish a leadership cost structure,” said David Zinsner, Intel CFO. “We remain committed to the strategy and long-term financial model communicated at our investor meeting.”
Financial highlights for the third quarter of 2022
| GAAP | Non-GAAP | ||||||
| Third quarter 2022 | Third quarter 2021 | vs Q3 2021 | Third quarter 2022 | Third quarter 2021 | vs Q3 2021 | ||
| Revenue ($B) | 15.3 dollars | 19.2 dollars | down 20% | $15.3^ | 18.1 dollars | down 15% | |
| Gross profit | 42.6% | 56.0% | down 13.4 points | 45.9% | 58.3% | down 12.4 points | |
| R&D and MG&A ($B) | $6.0 | $5.5 | up 10% | $5.4 | 4.8 dollars | up 12% | |
| Operating margin | (1.1)% | 27.2% | down 28.4 points | 10.8% | 31.8% | down 21 points | |
| Tax rate | 642.0% | 0.5% | n/m1 | (38.7)% | (4.2)% | n/m1 | |
| Net Revenue (Billion USD) | $1.0 | 6.8 dollars | down 85% | $2.4 | $5.9 | down 59% | |
| Earnings per share | $0.25 | $1.67 | down 85% | $0.59 | $1.45 | down 59% | |
In the third quarter, the company generated $1.0 billion in cash from operations and paid out $1.5 billion in dividends.
Business Unit Summary
Intel previously announced several organizational changes to accelerate its execution and innovation, allowing it to capture growth in both large traditional markets and high-growth emerging markets. This includes the reorganization of Intel’s business units to capture this growth and provide increased transparency, focus and accountability. As a result, the company changed its segment reporting in the first quarter of 2022 to align with the previously announced business reorganization. All prior period segment data has been retrospectively adjusted to reflect how the Company internally manages and monitors operating segment performance beginning in fiscal 2022.
| Revenue and trends of key business units | Third quarter 2022 | vs Q3 2021 | |||
| Client Computing Group (CCG) | 8.1 billion dollars | down | 17% | ||
| Data Center and AI Group (DCAI) | 4.2 billion dollars | down | 27% | ||
| Network and End Group (NEX) | 2.3 billion dollars | up | 14% | ||
| Accelerated Computing and Graphics Group (AXG) | 185 million dollars | up | 8% | ||
| Mobileye | 450 million dollars | up | 38% | ||
| Intel Foundry Services (IFS) | 171 million dollars | down | 2% | ||
Business Highlights
▪ Intel continues to move forward with its goal of reaching five nodes in four years. Intel 4 is moving toward high-volume production, and the company expects to record a production step on Meteor Lake in the fourth quarter, the latest step in taking the 14th Gen Intel Core processors from the design phase to early production in silicon. Intel 3 continues to progress on schedule. The Intel 20A and Intel 18A, Intel’s first in-house test chips and those of a large potential foundry customer, are recorded with products that are in production.
▪ In the third quarter, CCG launched the 13th generation Intel Core processors, which offer the world’s fastest desktop processor and optimized gaming, content creation and productivity. CCG also introduced Intel Unison to deliver the industry’s best user experience across multiple devices.
▪ DCAI has shipped its 4th generation Intel Xeon Scalable processor SKUs in high volume. Google also introduced its C3 series of machines powered by Intel’s 4th generation Intel® Xeon Scalable processor and Google’s custom Intel Infrastructure Processing Unit E3200.
▪ NEX introduced its 12th generation Intel Core processors optimized for IoT applications, designed for use cases in retail, banking, hospitality, education, industrial manufacturing and healthcare.
▪ AXG launched the Intel Data Center GPU Flex Series, providing customers with a single GPU solution for a wide range of visual cloud workloads, as well as the Intel Arc A770 and A750 desktop GPUs, bringing much-needed GPU pricing and performance balance to gamers across world.
▪ This week, Mobileye went public on the Nasdaq stock exchange, which Intel believes will unlock value for Intel shareholders.
▪ IFS announced that NVIDIA has committed to join the Intel-led US Department of Defense (DOD) RAMP-C program, enabling both commercial foundry and DOD customers to benefit from the large-scale investment of Intel in leading technologies. Additionally, since the second quarter, IFS has expanded its commitments to seven of its top 10 foundry customers, coupled with continued pipeline growth, to include 35 customer test chips.
During the quarter, Intel introduced the Semiconductor Co-Investment Program (SCIP), a new financing model for the capital-intensive semiconductor industry. As part of SCIP, Intel has signed a definitive agreement with Brookfield Asset Management, one of the largest global alternative asset managers, under which the companies will jointly invest up to $30 billion in Intel’s manufacturing expansion at its Ocotillo campus in Chandler, Arizona. The company also made progress toward creating a geographically balanced, secure and sustainable semiconductor supply chain by breaking ground on two of the world’s most advanced chip manufacturing facilities in Ohio. This site is designed to power a new generation of innovative products from Intel and serve the needs of foundry customers as part of the company’s IDM 2.0 strategy.
As Intel embarks on its next phase of IDM 2.0, it is adopting a foundry mindset and model for its IFS customers and Intel product lines. To drive this, Intel created the IDM 2.0 Acceleration Office (IAO), led by Stuart Pan, Chief Business Transformation Officer. The IAO will be responsible for the full implementation of Intel’s IDM 2.0 model and the development and implementation of the systems and processes in support of the company’s internal requirements and the foundry’s external customer engagements. This is intended to allow Intel to identify and address the structural inefficiencies that exist in its current model, achieve more transparency on its financial performance, better measure itself against other foundries and achieve best-in-class performance of foundries.
