Intel(US:INTC)2023-01-26 16:00Financial Performance - 2022 revenue was $63.1 billion, down $16.0 billion, or 20% from 2021, with CCG revenue decreasing by 23% and DCAI revenue decreasing by 15%[13]. - Gross margin decreased by 12.8 percentage points from 2021, attributed to lower revenue, higher unit costs, and increased inventory reserves[17]. - Diluted EPS fell by $2.92 or 60% from 2021, driven by lower gross margin and higher operating expenses[17]. - Operating cash flow decreased by $14 billion or 48%, resulting in adjusted free cash flow down $15 billion or 137%[17][18]. - Revenue for 2022 was $31.7 billion, down 23% year-over-year, primarily due to macroeconomic weakness affecting PC total addressable market (TAM) in consumer, education, and small/medium business sectors[70]. - Operating margin decreased to $6.3 billion, down 60% year-over-year, attributed to lower notebook and desktop revenue, higher unit costs, and increased investments in leadership products[70]. - The company reported an operating income of $2.3 billion in 2022, down from $19.5 billion in 2021[126]. - Net income attributable to Intel was $8.0 billion in 2022, a significant decline from $19.9 billion in 2021[126]. - The company reported a net increase in cash and cash equivalents of $6.3 billion in 2022, reversing a decrease of $1.0 billion in 2021[153]. - The company had total debt of $42.1 billion as of December 31, 2022, an increase from $38.1 billion in 2021[150]. Investment and Capital Expenditures - The company invested $17.5 billion in R&D and made capital investments of $24.8 billion in 2022[13]. - Future capital expenditures are expected to remain higher than historical levels as the company targets delivering five technology nodes in four years[19]. - The company plans to invest over $20 billion in a new semiconductor campus in Ohio and up to €80 billion in the European Union over the next decade[22]. - The company is focused on expanding its manufacturing capacity and plans to invest up to $30 billion in the Arizona Fab LLC for enhanced manufacturing infrastructure[22]. - The company had commitments for capital expenditures of $22.7 billion for 2023, indicating a focus on significant manufacturing expansion plans[149]. - Capital expenditures for 2022 were $24.8 billion, an increase from $18.7 billion in 2021, reflecting ongoing investments in manufacturing and technology[155]. Strategic Initiatives - The IDM 2.0 strategy includes transitioning to an internal foundry model to enhance operational efficiency and accountability[19]. - The company is pursuing the acquisition of Tower Semiconductor Ltd. to accelerate its global foundry business and strengthen its IDM 2.0 strategy[22]. - The company aims to achieve process technology leadership by 2025, planning to deliver five technology nodes in four years[44]. - The company is focused on product leadership across various computing architectures, including x86 and xPU products, to meet diverse customer needs[26]. - The company aims to build a world-class foundry business to meet the growing global demand for semiconductors, differentiating its offerings through advanced packaging and process technology[28]. Market Conditions and Challenges - The uncertain macroeconomic environment, including inflation and geopolitical tensions, is expected to impact business conditions into 2023[19]. - The company expects macroeconomic uncertainty and a challenging market environment to persist into 2023[128]. - The competitive environment has intensified, with significant competition from companies like AMD, Qualcomm, and NVIDIA, impacting demand and pricing for the company's products[182]. - The company faced delays in the release of its Sapphire Rapids product, which was postponed from the first half to the second half of 2022, highlighting challenges in timely product development[182]. - The company experienced demand volatility and supply chain disruptions in 2022, impacting revenue and operational performance[168]. Sustainability and Corporate Responsibility - The company aims to achieve net-zero greenhouse gas emissions across its global operations by 2040, enhancing energy efficiency and reducing the carbon footprint of its products[23]. - Intel has achieved gender pay equity globally since 2019 and maintains race/ethnicity pay equity in the US, with a commitment to transparency in pay and representation data[57]. - The company has conserved approximately 973 million kWh of energy cumulatively since 2020, aiming to conserve 4 billion kWh of energy this decade[62]. - Intel has committed to achieving net positive water globally and has conserved approximately 26.2 billion gallons of water since 2020, with a target to conserve 60 billion gallons by 2030[63]. - The company launched new products in 2022, including the 12th Gen Intel Core HX processors and the 13th Gen Intel 7 client product, enhancing its CPU and related solutions portfolio[66]. Workforce and Diversity - The workforce consists of 131,900 employees, with a focus on attracting and retaining top talent in the semiconductor industry[52]. - The undesired turnover rate was 5.6% in both 2022 and 2021, indicating a stable workforce amidst competitive talent conditions[53]. - The company is committed to creating an inclusive workplace and fostering a culture of empowerment, inclusion, and accountability[52]. - Intel aims to double the number of women in senior leadership and underrepresented minorities in US senior leadership by 2030, with a goal of 10% of employees self-identifying as having a disability[54]. - The Global Inclusion Index Survey saw nearly double the number of participating companies in 2022 compared to 2021, indicating progress in diversity and inclusion practices across industries[55]. Risks and Legal Matters - The company is subject to increasing cybersecurity threats, with a notable rise in ransomware attacks observed in its supply chain[196]. - The company is engaged in multiple litigation and regulatory matters that could result in costly and time-consuming outcomes, impacting its operations and reputation[200]. - The company faces ongoing litigation related to IP rights, including a notable case where juries returned unfavorable verdicts of $945 million and approximately $2.2 billion in damages[199]. - The company is vulnerable to reputational damage from catastrophic events and cybersecurity incidents, which could reduce demand for its products and affect investor confidence[195]. - The company has experienced significant disruptions in manufacturing processes due to power outages and supply chain issues, which could adversely affect revenue[195].