Intel(US:INTC)2026-01-22 23:43Financial Performance - Intel's total revenue for Intel Products in 2025 was $49.1 billion, a decrease of $324 million from 2024[123]. - Operating income for Intel Products in 2025 was $12.7 billion, down $269 million from 2024, with a total operating margin of 26%[125]. - Client revenue in 2025 was $27.6 billion, down $1.1 billion from 2024, primarily due to lower client volume and inventory reductions[126]. - DCAI revenue increased by $794 million in 2025, driven by a 9% increase in server volume due to higher hyperscale customer demand[126]. - Consolidated revenue for Intel was $52.9 billion in 2025, a decrease of $248 million from 2024, with CCG revenue down 3% due to lower client volumes[142]. - Gross profit increased by $1.0 billion, or 6%, in 2025 compared to 2024, driven by reduced asset impairments and accelerated depreciation charges[146]. - Operating loss for Intel Foundry was $10.3 billion in 2025, an improvement from a $13.3 billion loss in 2024, primarily due to reduced asset impairments and lower operating expenses[132]. - Mobileye revenue in the "all other" category was $1.9 billion in 2025, up $240 million from 2024, due to improved customer inventory levels[137]. - Operating income for the "all other" category was $264 million in 2025, compared to an operating loss of $57 million in 2024, driven by higher Mobileye revenue[139]. Research and Development - R&D expenses were $13.8 billion in 2025, down from $16.5 billion in 2024 and $16.0 billion in 2023, focusing on AI integration and next-generation process technologies like Intel 18A and Intel 14A[84]. - Total R&D and MG&A expenses for 2025 were $18.4 billion, down 17% from 2024, representing 34.8% of revenue[148]. - R&D expenses for 2025 decreased by $2.8 billion, or 17%, from 2024, primarily due to lower payroll-related expenditures and $610 million of lower share-based compensation[150]. Capital Expenditures and Investments - The company plans significant long-term investments in manufacturing expansion, including a new facility in Ohio[176]. - As of December 27, 2025, the company had commitments for capital expenditures of $9.1 billion for 2026 and $3.7 billion in long-term capital expenditures[177]. - The company initiated the consolidation of assembly and test operations in Costa Rica into larger sites in Vietnam and Malaysia to align capital spending with market demand[118]. - The transition to a disciplined capital deployment strategy in 2025 includes consolidating assembly operations in Costa Rica into larger sites in Vietnam and Malaysia, expected to complete by the end of 2026[72]. Strategic Partnerships and Market Position - A strategic partnership with NVIDIA was announced to co-develop custom client and data center products, leveraging both companies' technologies[28]. - The company aims to revitalize the x86 ecosystem to support evolving market needs, including those driven by various AI applications[28]. - The competitive landscape in the data center CPU market remains intense, with significant competition from AMD, NVIDIA, and custom silicon developers among others[45]. Supply Chain and Manufacturing - The focus on a secure and geographically diversified supply chain is emphasized in light of increased geopolitical tensions[25]. - The company expects supply constraints to persist into 2026, potentially limiting the ability to meet customer demand for CCG and DCAI products[142]. - The semiconductor supply chain remains volatile, with reliance on sole-source providers for critical tools and materials, necessitating close relationships with suppliers to mitigate risks[73]. - The company plans to continue manufacturing the majority of its products in its own factories to optimize performance and meet customer demand, while also streamlining operations by consolidating its Costa Rican assembly and test operations by the end of 2026[31]. Workforce and Organizational Changes - The company had an undesired turnover rate of 7.9% in 2025, compared to 5.9% in 2024[91]. - The company employed 85,100 people as of December 27, 2025, focusing on attracting and retaining top talent[89]. - The 2025 Restructuring Plan led to a 15% reduction in the core Intel workforce, with restructuring charges totaling $2.2 billion, primarily from employee severance and asset impairment[113]. - The company has streamlined organizational structures to enhance agility and accountability, emphasizing technical excellence and customer impact[90]. Environmental Initiatives - The company aims for 95% global renewable electricity use by December 31, 2025, tying executive bonuses to this target[102]. - The company has invested in environmental projects to cut greenhouse gas emissions, energy, and water use[97]. Financial Transactions and Gains - The company divested 51% of Altera for net purchase consideration of $4.3 billion, including $4.8 billion in cash proceeds received in Q3 2025[109]. - The company recorded a $163 million benefit from the reduction of a previously accrued fine of $401 million from 2023, with a guarantee funded by a $340 million deposit[178]. - The company received $5.7 billion in accelerated disbursements under the commercial CHIPS Act agreement[110]. - The company issued 275 million shares to the U.S. Department of Commerce at a price of $20.00 per share as part of the CHIPS Act agreement[110]. - The company completed a share sale to SoftBank Group for 87 million shares at $23.00 per share, totaling $2.0 billion[111]. - The company sold 215 million shares to NVIDIA at $23.28 per share for an aggregate cash purchase price of $5.0 billion[111]. Impairments and Financial Adjustments - The company recognized $3.3 billion in non-cash impairments and accelerated depreciation charges related to manufacturing assets[117]. - Intel incurred $950 million in asset impairments in 2025, significantly lower than the $3.3 billion recognized in 2024[132]. - The company recorded accelerated depreciation charges of $456 million in 2025 due to adjustments in the useful lives of certain manufacturing assets[204]. - The company recognized non-cash impairment charges of $494 million for property, plant, and equipment, while in 2024, the charges amounted to $2.3 billion[206]. Future Outlook - The company anticipates continued momentum in the semiconductor industry, driven by the rapid adoption of AI technologies across multiple sectors[23]. - The company expects a significant decrease in the percentage contribution of Intel Core products to CCG sales in 2026, as sales of Intel Core Ultra processors are anticipated to increase[56]. - Intel expects a hypothetical increase in interest rates of 1% would result in an increase in annual interest expense of approximately $97 million from debt outstanding as of December 27, 2025[196].