After its earnings bloodbath yesterday, chipmaker Intel Corporation’s chief executive officer Mr. Patrick Gelsinger commented on his company’s latest position during the analyst call. Mr. Gelsinger, who took over the helms at Intel almost two years back, is a towering individual in the chip sector. His tenure at Intel started during another slowdown in the company’s history – but one that has seen it face a new rival in the form of the Taiwan Semiconductor Manufacturing Company (TSMC). Now, Intel and TSMC are neck to neck when it comes to manufacturing chips, and Mr. Gelsinger’s comments during the earnings call outlined that he believes his firm will achieve process performance parity next year.
Intel Aiming To Achieve Manufacturing Process Leadership Through Its 18A (2nm) Chip Node
Heading into yesterday’s earnings report, analysts had already started to caution that not only will the results for Q4 2022 disappoint, but that investors should also brace themselves for low guidance for the first quarter of this year. Intel didn’t disappoint on either count, as its fourth quarter of 2022 revenue came in at $14 billion with 10 cents on the share. Analysts, on the other hand, had expected the company to rake in $14.5 billion in revenue with 20 cents on the share.
Guidance for the first quarter was equally, if not more, horrendous. Intel shared a revenue estimate ranging between $10.5 billion and $11.5 billion, with a loss of 15 cents a share. Analysts, the ever optimists in this case, had pegged the firm to post a profit of 25 cents per share and revenue of $13.96 billion as its estimates. A final nail in the proverbial coffin was the company abstaining from providing any guidance further than the first quarter.
The subsequent flood of Wall Street share price targets is a sight that we’ve become accustomed to. Analysts from JPMorgan, Rosenblatt, Mizuho, Deutsche Bank, Credit Suisse, Baird, Bank of America, Cowen, Susquehanna, Truist and Northland all downgraded the share price target. The lowest target came from Rosenblatt with an abysmal $17 per share and the largest reduction (16%) came from Cowen.
An Intel presentation from earlier this month showcasing its plans for process leadership with a disclaimer that plans can change without notice. Image: Intel Corporation
Intel’s chief, Patrick Gelsinger, addressed analysts during the company’s post-earnings call. Right off the bat, he admitted that the results were below what Intel had ‘expected of itself.’ He also pointed out the weak macroeconomic environment. Still, the executive remained upbeat on usage levels by highlighting that the high personal computing usage during the coronavirus pandemic appears to be sticking.
However, his comments about the firm’s manufacturing technology were most telling, as Ms. Gelsinger stated:
We will, one, deliver on five nodes in four years, achieving process performance parity in 2024 and unquestioned leadership by 2025 with Intel 18A. Two, execute on an aggressive Sapphire Rapids ramp, introduce Emerald Rapids in second half 2023 and Granite Rapids and Sierra Forest in 2024. Three, ramp Meteor Lake in second half 2023 and PRQ Lunar Lake in 2024, and four, expand our IFS customer base to include large design wins on Intel 16, Intel 3 and 18A this year.
Intel’s 20A, based solely on marketing nomenclature, is similar to TSMC’s 2-nanometer chip technology. TSMC expects this technology to enter mass production by 2025 after entering risk production a year earlier. Crucially, Intel’s updated roadmap shared in December states that 20A will be ‘manufacturing ready’ by the first half of 2024. This, of course, leaves the question of how long it will take Intel to progress from ‘manufacturing ready’, which (in our opinion) should be synonymous with risk production, to Intel’s preferred ‘high volume manufacturing’ and then the subsequent ramp to mass production.
On the positive side, some financial firms believe that the worst might just be over for Intel. For instance, Deutsche analyst Ross Seymore believes that the first quarter guidance can be the proverbial bottom. Similarly, Summit Insights holds the opinion that Intel’s market share loss in the personal computing client market has finally stopped and inventory correction will be over at the end H1 2023. It advises ‘long term’ investors to start looking for an entry point into the stock, as the firm belives that financial performance will improve later this year.
The post Intel Chief Implicitly Admits Firm Has Lost Leadership To TSMC by Ramish Zafar appeared first on Wccftech.
