Intel(US:INTC)2024-01-25 23:38Financial Performance - 2023 revenue was $54.2 billion, down $8.8 billion, or 14% from 2022[15] - Gross margin decreased by 3.7 percentage points from 2022, with diluted EPS down $1.54 or 79%[17] - Adjusted free cash flow was $(11.9) billion, indicating a significant cash outflow[15] - Operating income increased by 17% year over year, with an operating margin of 22% in 2023 compared to 18% in 2022[85] - 2023 operating income was $(530) million, down from $1.3 billion in 2022, primarily due to lower server revenue and increased unit costs[95] - Operating loss for 2023 was $482 million, compared to operating income of $1.0 billion in 2022, driven by lower product margins and higher period charges[104] - Revenue for 2023 was $5.8 billion, down $2.6 billion from 2022, as customers reduced purchases to adjust to lower demand across product lines[104] - Mobileye revenue for 2023 was $2.1 billion, up $210 million from 2022, primarily due to higher demand for EyeQ products[113] Revenue Breakdown - CCG revenue decreased 8% due to lower notebook and desktop volume, while DCAI revenue decreased 20% from a softening CPU data center market[15] - NEX revenue decreased 31% as customers reduced purchases to adjust to lower demand[15] - Notebook revenue for 2023 was $17.0 billion, down $1.8 billion (5% volume decrease) from 2022, while desktop revenue was $10.2 billion, down $495 million (9% volume decrease) from 2022[82] - Server volume decreased by 37% from 2022, while server average selling prices (ASPs) increased by 20% due to a lower mix of hyperscale customer-related revenue[95] Research and Development - The company invested $16.0 billion in R&D and made capital investments of $25.8 billion[15] - Research and development expenses for 2023 totaled $16.0 billion, representing 29.6% of revenue[122] - R&D spending decreased by $1.5 billion, or 8%, in 2023 compared to 2022, primarily due to cost-cutting measures and higher incentive-based cash compensation[131] - The company aims to achieve process technology leadership by 2025, planning to deliver five technology nodes in four years[46] Strategic Initiatives - The internal foundry model is expected to reshape operational dynamics and improve efficiencies starting in 2024[19] - The company aims to regain process leadership and establish a leading-edge foundry business through critical capital investments[19] - The IDM 2.0 strategy combines internal manufacturing, strategic foundry capacity, and an Open System Foundry to meet global semiconductor demand[28] - Intel aims to lead in AI by infusing AI into its technologies and supporting GenAI workloads, with a focus on hardware and software platforms[25] Environmental and Social Responsibility - The company is committed to reducing its environmental footprint through efficient use of natural resources and materials[36] - The company has committed to achieving net-zero upstream Scope 3 greenhouse gas emissions by 2050, with a focus on reducing suppliers' greenhouse gas emissions[66] - The company aims to achieve net-zero greenhouse gas emissions in its operations by 2040 and net-zero upstream Scope 3 emissions by 2050, with a 10% reduction target in absolute emissions from a 2019 baseline by 2030[67] - In 2023, the company achieved 99% renewable electricity usage globally, surpassing its target of 95%[68] Workforce and Diversity - As of December 30, 2023, the company employed 124,800 people, focusing on attracting and retaining top talent to support growth ambitions[56] - The company aims to achieve 25% representation of women in senior leadership and 12% representation of underrepresented minorities in US senior leadership by 2030[59] - The company plans to increase global annual spending with diverse suppliers to reach $2.0 billion by 2030, enhancing innovation and value through a diverse supply chain[66] Market and Competitive Landscape - The company faces intense competition from major players like AMD, Qualcomm, and NVIDIA, which could adversely affect financial results and market share[155] - The company is pursuing a strategy to establish Intel Foundry Services (IFS) as a major provider of foundry capacity, facing competition from established players like TSMC and Samsung[156] - The chip industry is undergoing a transformation driven by five superpowers, including AI and pervasive connectivity, impacting semiconductor market growth[118] Financial Health and Investments - Total cash and investments decreased from $28.8 billion in 2022 to $25.0 billion in 2023, while total debt increased from $42.1 billion to $49.3 billion[140] - The company had commitments for capital expenditures of $20.4 billion for 2024, indicating a focus on significant manufacturing expansion[138] - The company expects to incur additional indebtedness and refinance existing debt as part of its IDM 2.0 strategy[193] Risks and Challenges - The company faces significant risks associated with the evolving market for AI products, including competition and the need for third-party software development[173] - Geopolitical tensions, particularly between the US and China, have led to increased tariffs and trade restrictions that affect customer ordering patterns[171] - The company is subject to increasing cybersecurity threats, with attempts to access sensitive data and disrupt operations expected to rise, potentially impacting financial results[181] - The company faces risks related to IP rights claims that could harm its competitive position and revenue[185]