quarterly figures
Profit slump: Intel resorts to tough austerity measures
Intel must save. photo
© Fabian Sommer/dpa
The PC processor business is still Intel’s mainstay. Now the chip giant has to start cutting back after a slump in PC sales.
The chip group Intel is hit hard by the downturn in the PC market and resorts to extensive austerity measures. In the last quarter, consolidated sales fell by a fifth year-on-year to $15.3 billion. The bottom line is that profits even fell by 85 percent to one billion dollars.
In the coming year, Intel now wants to reduce costs by three billion dollars – and is even aiming for annual savings of eight to ten billion dollars by the end of 2025. It is not yet clear how many of the more than 120,000 Intel employees will be affected by the austerity measures. Intel is also considering selling parts of the company, CEO Pat Gelsinger told the Wall Street Journal.
A charge of $664 million was booked for remodeling in the past quarter. Intel shares rose about 10 percent in early US trade on Friday.
chips and data centers
For Intel, the business with chips for personal computers continues to play a major role – and the market had recently shrunk significantly. Revenue from Intel’s PC division fell 17 percent year over year to $8.1 billion, mainly due to a downturn in notebook chips. The division’s operating profit fell by more than half to $1.65 billion. According to market researchers, global PC sales fell by 15 percent in the past quarter.
But also in the business with data centers there was a strong decline of 27 percent to 4.2 billion dollars. The division’s operating profit even shrank from just under $2.3 billion a year ago to just $17 million.
High inflation and concerns about the economy are currently keeping companies from investing in new technology. The strong dollar is also weighing on business.
Intel expects the economic uncertainty to continue into the coming year, Gelsinger said in a conference call with analysts. The slowdown in business comes at an inopportune time for Intel: The group is currently investing billions in expanding production and research in order to catch up with Asian rivals in terms of technology. The austerity measures are an additional challenge. “It’s like stepping on the accelerator and the brake at the same time,” Gelsinger told the Wall Street Journal.