China Fund News reporter Ivan
U.S. stocks are still in the intensive disclosure period of earnings reports, and the market focuses on the second quarter results of technology leaders. Following Apple, Intel, the trillion-dollar chip leader and the largest chip manufacturer in the United States, also handed over its report card, turning profit into loss year-on-year.
It is worth noting that Intel officially announced in this earnings report that it will completely shut down (wind down) its Optane technology-related business, which has been in a state of loss. Intel officially launched this high-speed storage technology in 2015, and once launched, it was hailed as a "Moore's Law disruptor".
Huge losses year after year! Optane's business will be shut down completely
While handing over a not-so-good second-quarter financial report, Intel finally confirmed in the corner of the financial report that it would gradually shut down the Optane business and no longer develop new products in the future. On a post-earnings conference call, Intel said the shutdown of Optane's business would result in an impairment of $559 million (about 3.7 billion yuan).
It has been previously reported that the loss of Optane's business has reached $576 million in 2020, and it is estimated that the loss in 2021 may also be about $529 million.
(Source: Intel 2022Q2 Earnings)
Optane technology consists of a combination of 3D XPoint memory media, Intel memory and storage controllers, Intel Interconnect IP, and Intel software. Among them, 3D XPoint memory media is the cornerstone of Optane technology. Optane has gone from a revolutionary memory business/SSD that was once given high hopes by Intel to a gradual shutdown in just seven years.
(Source: Tomshardware)
In fact, the shutdown of Optane's business has long been foreshadowed, and Intel seems to have been "forced" to shut down.
Since the dissolution of IMFT (IM Flash Technologies, Intel Micron's joint venture semiconductor company), Micron has become the only production plant with 3D XPoint, but Micron abandoned its own 3D XPoint plan and sold the factory to Texas Instruments at the end of 2021, which makes intel unable to produce the 3D Xpoint chips needed by Optane, which means that Intel may also stop talking about 3D in the future Further exploration of XPoint technology.
Foreign media reported that there are many products under Intel's Optane brand, including Optane memory, Optane persistent memory and Optane SSD, but the company has previously divided all products into the scope of "Optane memory business", so the gradual closure of the entire Optane department, not only Optane memory products.
It is worth noting that according to foreign media statistics, this is already the sixth non-core business that Intel CEO Pat Gelsinger has "sold". Other businesses sold include the recent sale of the drone business to Elon Musk's brother, as well as the sale of the SSD storage division (NANA and SSD) to SK hynix. According to statistics, these transactions could allow Intel to receive $1.5 billion and invest in its core business areas.
According to the earnings report, Intel has focused on future products based on the CXL specification. Compute EXpress Link (CXL) is an open interconnect protocol that enables high-speed and efficient interconnection between CPUs and GPUs, FPGAs, or other accelerators to meet the requirements of today's high-performance heterogeneous computing, as well as higher bandwidth and better memory consistency.
Kissinger said the industry's shift to the CXL architecture is a harsh reality that Optane has to face.
After hours, the stock price of the financial report "thunder" once fell by more than 10%
The market expected a significant decline in Intel's performance in the second quarter, but it was not expected that the decline would be so large, and the third quarter performance guidance was even worse.
According to Intel's july 28 U.S. stock after-hours earnings report, its second-quarter revenue was $15.321 billion, down 22% from $19.631 billion in the same period last year and well below the average analyst estimate of $18 billion; The Company's net loss was $454 million, compared to a net income of $5,061 million for the year-ago quarter, and a diluted loss per share was $0.11 compared to a diluted earnings per share of $1.24 for the same period last year.
In the quarter ended July 2, Intel's revenue fell by about 22% year-over-year, according to the financial report data. According to Refinitiv's data, Intel's revenue for the quarter was 14 percent lower than expected, the company's worst quarterly revenue since 1999.
(Source: Intel 2022Q2 Earnings)
At the same time, the company has given the latest performance guidance, which has significantly reduced the adjusted operating income guidance for the whole year from $76 billion to $65 billion to $68 billion, a decrease of 10.5%-14.5%, which is far below the market expectation of $74.76 billion.
The market had expected that the decline in PC sales would drag down Intel's performance, but the company's server chip revenue fell unexpectedly by 16%, further dragging down overall sales and profits. CEO Kissinger said most of the company's losses were caused by the economic slowdown, but the failure to produce better products on time was also responsible for the losses.
Kissinger believes that Intel's current order level is lower than the end market's consumption of Intel-powered devices, which means that once inventory is exhausted, sales will rebound. He also said the company would not abandon plans to invest heavily in improving manufacturing technology, developing new products and entering new markets to chase future opportunities. The economic downturn and performance crunch will help the company make bigger bets more strategically while cutting back on investments in less important areas.
But Intel's chief financial officer, Zinsner, said on a conference call: "We think we've reached the bottom," and he expects price increases and seasonal improvements in the fourth quarter should help Intel's gross margin rebound to 51 percent to 53 percent.
After the performance "thunder", Intel's after-hours stock price once fell by more than 10%, as of the end of the draft, the decline is still more than 8%, if calculated according to this decline, Intel's market value will fall by more than $13 billion (about 87 billion yuan).
EDIT: Captain