What you need to know
- Intel recorded a loss of $500 million in Q2 2022.
- This is the first time in decades the company has posted a quarterly loss.
- Intel's Accelerated Computing Systems and Graphics division lost $507 million in the quarter.
Intel posted a loss of $500 million in Q2 2022. This marked the first quarterly loss that the company has seen in decades as highlighted by Tom's Hardware. The company saw revenue drops in its Client Computing Group (own 25%), Datacenter and AI Group (down 16%), and Intel Foundry Services (down 54%). Intel's overall revenue, gross margin, operating margin, net income, and earnings per share all went down as well when compared to Q2 2021.
Intel CEO Pat Gelsinger pointed to several factors that contributed to the loss, including internal and external factors.
“This quarter’s results were below the standards we have set for the company and our shareholders. We must and will do better. The sudden and rapid decline in economic activity was the largest driver, but the shortfall also reflects our own execution issues,” said Gelsinger. “We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities. We are embracing this challenging environment to accelerate our transformation.”
The CEO also highlighted that the CHIPS act, which recently passed the U.S. Senate, will soon be enacted. That legislation would see billions of dollars granted to chip makers, including Intel.
| Category | Q2 2022 | Q2 2021 | vs. Q2 2021 |
|---|---|---|---|
| Revenue (billions) | $15.3 | $19.6 | down 22% |
| Gross margin | 36.5% | 57.1% | down 20.6 ppt |
| R&D and MG&A (billions) | $6.2 | $5.3 | up 17% |
| Operating margin | (4.6%) | 28.3% | down 32.8 ppt |
| Tax rate | 50.1% | 11.9% | up 38.1 ppt |
| Net income (billions) | $(0.5) | $5.1 | down 109% |
| Earnings per share | $(0.11) | $1.24 | down 109% |
Intel's Accelerated Computing Systems and Graphics Group lost $507 million in Q2 2022. It saw sales of $186 million, which was not enough to record a positive revenue. Intel's Arc Alchemist GPUs have only launched in China, though PC Gamer notes that even a timely launch of the graphics likely would not have overcome the company's losses.
Intel had to lower its expectations for its Accelerated Computing Systems and Graphics Group. The company explained that it will "not hit [its] GPU unit target."
Despite the poor quarter, Gelsinger shared a positive outlet regarding Intel Arc graphics. "We remain on track to deliver over $1 billion in revenue this year. In Q2, we started to ramp Intel Arc graphics for laptops and OEMs, including Samsung, Lenovo, Acer, HP and Asus…. Intel Arc A5 and A7 desktop cards will start to ship in Q3."
While Intel Foundry Services revenue was down 54%, things could change in the near future. Intel just announced that MediaTek, one of the world's largest chip designers, will use Intel Foundry Services to manufacture chips for a range of devices.
| Category | Q2 2022 | vs. Q2 2021 |
|---|---|---|
| Client Computing Group | $7.7 billion | down 25% |
| Datacenter and AI Group | $4.6 billion | down 16% |
| Network and Edge Group | $2.3 billion | up 11% |
| Accelerated Computing Systems and Graphics Group | $186 million | up 5% |
| Mobileye | $460 million | up 41% |
| Intel Foundry Services | $122 million | down 54% |
Intel projects revenue between $15 billion and $16 billion for Q3 2022, which is much lower than the $19.2 billion the company brought in during the same quarter of last year. The tech giant expects gross margins of 43.2% in the quarter, which would mark a dip of 56% compared to the previous year.
"We are being responsive to changing business conditions, working closely with our customers while remaining laser-focused on our strategy and long-term opportunities," said Gelsinger. "We are embracing this challenging environment to accelerate our transformation."
Intel projects revenue of $65-$68 billion for all of 2022, which is between $8-$11 billion lower than first expected.
