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Intel Lost Half a Billion Dollars Last Quarter, Confirmed Pricing Increases, And Shut Down Optane

The bad performance of Intel this past quarter was partially attributable to lower PC sales, but the company’s graphics segment also suffered a significant $507 million operational loss. The chipmaker mentioned that it will shut down its Optane memory division and verified speculations that it planned to raise pricing for a number of its chips in Q4.

On Thursday, Intel announced its 2022 second-quarter earnings report. The company’s sales decreased by 22% year over year to $15.3 billion, and it recorded a net loss of $454 million at the conclusion of the quarter, down by 109% from the $5 billion in profit in Q2 2021.

The recent fall in economic activity, which was partially to blame for the deteriorating demand for PCs and componentry, was cited by the chipmaker. As a result of the epidemic forcing people to work and spend more time at home, demand for computers has dramatically increased over the last few years. Many computer businesses had record profits as a consequence, but this trend appears to be coming to an end as Intel predicted that the PC market will shrink by 10% this year.

PRICE HIKE CONFIRMED BY INTEL

The business verified previous rumours that it will be raising prices on several different devices, including controllers, Wi-Fi chips, and CPUs. According to Intel CFO David Zinsner, the price increases will go into effect in the fourth quarter because of ongoing inflationary cost increases that must eventually be passed down to customers.

Consumer CPUs are part of Intel’s Client Computing Group, which had a 25% YoY decline in revenue but still made $1.1 billion in profit. According to Intel CEO Pat Gelsinger, some of their biggest clients are cutting back on inventories at a rate that hasn’t been witnessed in the past ten years. The demand for processors allegedly fell the most in the consumer and educational PC industries.

The Accelerated Computing Systems and Graphics Group, on the other hand, lost $507 million this quarter. In addition to discussing the difficulties the business had in producing the graphics drivers, Gelsinger stated that the company will fall short of its internal goal of selling four million Arc GPUs this year.

“We thought that we would be able to leverage the integrated graphics software stack, and it was wholly inadequate for the performance levels, gaming compatibility, et cetera, that we needed,”

Gelsinger

OPTANE MEMORY & DRONE BUSINESS SHUTTING DOWN

The firm also disclosed that it will stop developing its 3D Xpoint technology and shut down its Optane memory division, resulting in a $559 million charge for inventory impairment this quarter. The chip manufacturer initially chose to preserve Optane but then sold it to SK Hynix.

Regarding 9,000 drones that supplied light shows for various occasions, including the Olympic Games and Super Bowl halftime shows, Intel disclosed that it also sold off its drone company. The division was purchased, according to a story from The Register by Elon Musk’s brother Kimbal.

Zinsner did, nonetheless, maintain optimism that things would change later this year. He stated, “We feel our turnaround is obviously taking form and anticipate Q2 and Q3 to represent the company’s financial bottom.” The newly approved CHIPS Act, which provides the semiconductor sector with a $52 billion boost in the form of subsidies for the building of new fabs, is anticipated to help Intel starting in 2019.