5 ms·

Intel's horrible quarter revealed an inventory glut and underused factories

36 points by baal80spam 4y ago

bhouston 4y ago
This is what happens when Intel's momentum from the past starts to eventually fade. It takes a long time for a large ship like Intel to lose momentum, but it has started and it will likely continue to slow down from here as long as AMD, ARM, Apple and now RISC-V keep the pace of their chip innovations.
- myth_drannon 4y ago
  It's ironic that Andrew Grove, the former CEO of Intel wrote a book called "Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business"
- hinkley 4y ago
  Momentum is what happens after you've turned the engine off. It's not momentum that's the problem. It's that they pushed out or alienated the golden goose.
trylfthsk 4y ago
Question - Why would they remain so committed to a dividend if: 1. They're losing money 2. Things are not going to improve near-term 3. Debt is currently (more) expensive 4. They're in a hugely capital intensive business and are on a current spending spree for competitiveness reasons. Other than some hand-wavy 'optics' rationales it seems like a bad idea, but I guess this is why I don't sit on the board of an F500. edit: should also note that tax drag is another malus against the dividend concept, altogether (rightly or wrongly) telling me the story that "we really don't have anything better to do with the money".
- drumhead 4y ago
  Probably to maintain the share price, a dividend is all they've got going for them right now. If that goes the share price will probably tank.
  - justahuman74 4y ago
    What's the actual problem with this? They're not issuing more stock to fund expansion are they?
    - bushbaba 4y ago
      Hostile takeover? If intel’s market cap drops enough someone might decide to buy them out
      - lights0123 4y ago
        If I understand it correctly, Intel would lose their patent cross licensing with AMD upon a "a Change of Control", significantly reducing its value. However, there are exceptions to that that are redacted from the public license.
        bushbaba 4y ago
        Hostile takeover isn’t a change of ownership. It’s the same company just taken private by someone like Bain and capital…. Likely then gutted for max profitability.
        shukantpal 4y ago
        Change of Control and Change of Ownership are two different things if you take the hint.
    - deleted 4y ago
      [deleted]
- reducesuffering 4y ago
  They can't even maintain their dividend with their latest quarterly profits. Dividend yield is 4.85%, so they should approx. be paying out $0.34 each quarter while they just made only $0.10 per share.
- niklasbuschmann 4y ago
  On the plus side, you can just avoid companies paying nonsensical dividends and focus on companies actually creating shareholder value with their money.
- ksec 4y ago
  >Why would they remain so committed to a dividend Pat tried to not have dividend but it didn't end well with their shareholders. I dont think it is much of an issue as long as the ship is steering in the right direction.
drumhead 4y ago
Can't say they don't deserve it for their greed and lack of investment. It'll be a business school case study. How a market leader pissed away their enormous lead. After Core2 and Bulldozer I thought it was game over for AMD and ARM were just too lightweight. Looks like I didn't bank on Intel's arrogance.
- mrjin 4y ago
  Intel virtually have been selling the same thing for over a decade. It's good for business as long as they can maintain their hegemony. But the thing is if you don't change, someone will change you. And that's how it gets here.
- deleted 4y ago
  [deleted]
- fidgewidge 4y ago
  Lack of investment? Didn't they get into this mess by being over-ambitious with their EUV plans and when their foundry tech bets failed, that screwed up the whole pipeline allowing AMD and then Apple to take the lead by outsourcing to TSMC?
Overtonwindow 4y ago
Did the chip shortage have an impact on this?
- soganess 4y ago
  Shooting from the hip here, but since Intel runs their own fab(s), that seems unlikely. Maybe for secondary chips on 3rd-party motherboards? It is also completely possible that they were affected in a different second-order way (IE no one could get their hands on AMD chips so they bought intel when they might have not otherwise, but that would obviously be a net positive). Or maybe the yields on the gen 11/12 10nm/"intel7" stuff stunk, but I don't remember hearing anything about that.
ivraatiems 4y ago
> "Management gave several reasons for the tough upcoming quarter, but one theme that came through was that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new chips." That's an interesting way to say "end users aren't buying our products, so the companies we sell to who stock them don't need more stock." Or maybe "our competitors' products are much better than ours, so people are buying those instead."
belval 4y ago
> The not-so-bad news: Dividend and self-driving What's the saddest part about that headline is the dividend is not supported by earnings which is the equivalent of saying "we have money but no plan" and self-driving is the only one of Intels likely hundred of bets to pay off at this point. How many promising startups did Intel acquire and kill at this point? They are bleeding money and have little to show for it and no plan aside from taking money from the CHIP act to keep their disgusting skeleton of a company afloat and I say that as someone who still has an oversized bet on INTC. Hopefully they won't end up killing the ARC line as well. EDIT: Also Pat Gelsigner took home $179M in 2021, go figure. EDIT2: From the man himself: > We will, one, deliver on five nodes in four years, achieving process performance parity in 2024 and unquestioned leadership by 2025 with Intel 18A. As if five nodes in four years was realistic from any standpoint.
- jimbo9991 4y ago
  Realistically what do you expect Intel to do? They design and manufacture commodity computer hardware. That isn't lucrative enough a business to fund a bunch of moonshot projects (at least without getting yourself axed). I expect them to continue selling similar sorts of hardware and making minor improvements. Expecting something more is expecting Intel to totally reorient itself and develop expertise in brand new fields (to them). If I were an Intel stockholder, I would be much more concerned if Intel appeared unfocused and intent on branching out into new markets. They should be a dividend stock, they are not a young company and they are not in a young industry anymore.
- ksec 4y ago
  >As if five nodes in four years was realistic from any standpoint. Except all the update they gave seems to be moving in that direction.
- BeetleB 4y ago
  > Also Pat Gelsigner took home $179M in 2021, go figure. Everytime someone posts a comment about some CEO making huge millions of dollars in one year, you look into the details and see it is completely off. He made about $10M that year (includes sign on bonus). He was given all kinds of RSUs that are dependent on the performance of Intel stock going up. INTC was close to $60 at that time. It has continued to drop down to under $30. If you read the SEC filings, you'll see the "grading" of his compensation, and he got a 0 for every one of them (obvious given the stock value has gone down). So the $179M was a hypothetical figure based on the share price at the time (with 3-4 years vesting, so not all in one year), and assumes he'll hit fairly aggressive stock targets. It helps sell papers, but the reality is much more banal. (He could still earn that much if he can get the stock price to triple in the next year or two, but we all know the likelihood of that happening).
mrjin 4y ago
Being on Intel platform for two decades and I just moved to AMD not long ago.
rektide 4y ago
Intel's actually been making pretty slick cores, especially given that it's 10nm+++ ("Intel 7"). Integrated Xe was a huge boost to graphics. Thunderbolt 4 on chip is exceptional; short-range 40Gbps networking on every computer with naught but a cable. The 10-, 11-, 12-, 13- series have each been pretty good improvements in various ways. They were way ahead of the curve with Foveros & EIMB, for assembling multiple chips, but haven't really started ramping up either as consumer-imapcting-products anywhere near as well AMD has (which is a shame because Lakefield was an awesome ultra-mobile chip that did great against the Snapdragon competitor, and had such a tiny footprint with onboard RAM). I'm really hopeful & looking forward to seeing what happens once they get their EUV fabs cranking out chips & hopefully continuing to improve their nodes. But I really do fear that chip-buying may be going down, and what that means the computing industry. Mass-volume chips fed scale & competition, made chips cheap & accessible & kept them progressing, kept inventory going down & making new good stuff necessary.
- mrjin 4y ago
  Large ship takes longer to turn around. What we can see now was something from maybe over a decade ago. Especially PCs are now with more than enough processing power. Once people decided to go for AMD or even arm, they are highly unlikely to buy any PC(Intel ones in particular) in the next a couple of years, no matter how good or how bad it might be.
  - rektide 4y ago
    Honestly given how ARM has generally been doing in laptop/internet device space, I kind of expected a lot more blowback & return to x86. For absolute battery life, ARM has been a winner. And that counts for a lot. But man, it is only very very recently I'd even start to consider an ARM chromebook or small laptop, because they've just been really really slow by compare (with Apple as an obvious & notable exception on iPad in particular for a long time now). It always felt like there was a missing story. That we lost a more gutsy, broadviewed computer media that could tell us what was what & make it clear: these laptops are just way way less than what you might be used to or expect. They're pretty decent, they work ok, but wow are you making a lot of sacrifices. The top tier Snapdragon 8's with X2 and X3 are at least vaguely competitive, but they're brand new, on mostly flagship devices, and rare. ARM has taken a decade of being really bad to bad to finally get a couple options that qualify as ok.
greatgib 4y ago
This is what is happening when they can't use anymore anti competitive monopolistic practices to push/force their products against more innovative/efficient competitors.

36 points by baal80spam 4y ago

This is what happens when Intel's momentum from the past starts to eventually fade. It takes a long time for a large ship like Intel to lose momentum, but it has started and it will likely continue to slow down from here as long as AMD, ARM, Apple and now RISC-V keep the pace of their chip innovations.

myth_drannon 4y ago
It's ironic that Andrew Grove, the former CEO of Intel wrote a book called "Only the Paranoid Survive: How to Identify and Exploit the Crisis Points that Challenge Every Business"
hinkley 4y ago
Momentum is what happens after you've turned the engine off. It's not momentum that's the problem. It's that they pushed out or alienated the golden goose.

trylfthsk 4y ago

Question - Why would they remain so committed to a dividend if: 1. They're losing money 2. Things are not going to improve near-term 3. Debt is currently (more) expensive 4. They're in a hugely capital intensive business and are on a current spending spree for competitiveness reasons. Other than some hand-wavy 'optics' rationales it seems like a bad idea, but I guess this is why I don't sit on the board of an F500. edit: should also note that tax drag is another malus against the dividend concept, altogether (rightly or wrongly) telling me the story that "we really don't have anything better to do with the money".

drumhead 4y ago
Probably to maintain the share price, a dividend is all they've got going for them right now. If that goes the share price will probably tank.
- justahuman74 4y ago
  What's the actual problem with this? They're not issuing more stock to fund expansion are they?
  - bushbaba 4y ago
    Hostile takeover? If intel’s market cap drops enough someone might decide to buy them out
    - lights0123 4y ago
      If I understand it correctly, Intel would lose their patent cross licensing with AMD upon a "a Change of Control", significantly reducing its value. However, there are exceptions to that that are redacted from the public license.
      - bushbaba 4y ago
        Hostile takeover isn’t a change of ownership. It’s the same company just taken private by someone like Bain and capital…. Likely then gutted for max profitability.
        shukantpal 4y ago
        Change of Control and Change of Ownership are two different things if you take the hint.
  - deleted 4y ago
    [deleted]
reducesuffering 4y ago
They can't even maintain their dividend with their latest quarterly profits. Dividend yield is 4.85%, so they should approx. be paying out $0.34 each quarter while they just made only $0.10 per share.
niklasbuschmann 4y ago
On the plus side, you can just avoid companies paying nonsensical dividends and focus on companies actually creating shareholder value with their money.
ksec 4y ago
>Why would they remain so committed to a dividend Pat tried to not have dividend but it didn't end well with their shareholders. I dont think it is much of an issue as long as the ship is steering in the right direction.

drumhead 4y ago

Can't say they don't deserve it for their greed and lack of investment. It'll be a business school case study. How a market leader pissed away their enormous lead. After Core2 and Bulldozer I thought it was game over for AMD and ARM were just too lightweight. Looks like I didn't bank on Intel's arrogance.

mrjin 4y ago
Intel virtually have been selling the same thing for over a decade. It's good for business as long as they can maintain their hegemony. But the thing is if you don't change, someone will change you. And that's how it gets here.
deleted 4y ago
[deleted]
fidgewidge 4y ago
Lack of investment? Didn't they get into this mess by being over-ambitious with their EUV plans and when their foundry tech bets failed, that screwed up the whole pipeline allowing AMD and then Apple to take the lead by outsourcing to TSMC?

Overtonwindow 4y ago

Did the chip shortage have an impact on this?

soganess 4y ago
Shooting from the hip here, but since Intel runs their own fab(s), that seems unlikely. Maybe for secondary chips on 3rd-party motherboards? It is also completely possible that they were affected in a different second-order way (IE no one could get their hands on AMD chips so they bought intel when they might have not otherwise, but that would obviously be a net positive). Or maybe the yields on the gen 11/12 10nm/"intel7" stuff stunk, but I don't remember hearing anything about that.

ivraatiems 4y ago

> "Management gave several reasons for the tough upcoming quarter, but one theme that came through was that its customers simply have too many chips and need to work through inventory, so they won’t be buying many new chips." That's an interesting way to say "end users aren't buying our products, so the companies we sell to who stock them don't need more stock." Or maybe "our competitors' products are much better than ours, so people are buying those instead."

belval 4y ago

> The not-so-bad news: Dividend and self-driving What's the saddest part about that headline is the dividend is not supported by earnings which is the equivalent of saying "we have money but no plan" and self-driving is the only one of Intels likely hundred of bets to pay off at this point. How many promising startups did Intel acquire and kill at this point? They are bleeding money and have little to show for it and no plan aside from taking money from the CHIP act to keep their disgusting skeleton of a company afloat and I say that as someone who still has an oversized bet on INTC. Hopefully they won't end up killing the ARC line as well. EDIT: Also Pat Gelsigner took home $179M in 2021, go figure. EDIT2: From the man himself: > We will, one, deliver on five nodes in four years, achieving process performance parity in 2024 and unquestioned leadership by 2025 with Intel 18A. As if five nodes in four years was realistic from any standpoint.

jimbo9991 4y ago
Realistically what do you expect Intel to do? They design and manufacture commodity computer hardware. That isn't lucrative enough a business to fund a bunch of moonshot projects (at least without getting yourself axed). I expect them to continue selling similar sorts of hardware and making minor improvements. Expecting something more is expecting Intel to totally reorient itself and develop expertise in brand new fields (to them). If I were an Intel stockholder, I would be much more concerned if Intel appeared unfocused and intent on branching out into new markets. They should be a dividend stock, they are not a young company and they are not in a young industry anymore.
ksec 4y ago
>As if five nodes in four years was realistic from any standpoint. Except all the update they gave seems to be moving in that direction.
BeetleB 4y ago
> Also Pat Gelsigner took home $179M in 2021, go figure. Everytime someone posts a comment about some CEO making huge millions of dollars in one year, you look into the details and see it is completely off. He made about $10M that year (includes sign on bonus). He was given all kinds of RSUs that are dependent on the performance of Intel stock going up. INTC was close to $60 at that time. It has continued to drop down to under $30. If you read the SEC filings, you'll see the "grading" of his compensation, and he got a 0 for every one of them (obvious given the stock value has gone down). So the $179M was a hypothetical figure based on the share price at the time (with 3-4 years vesting, so not all in one year), and assumes he'll hit fairly aggressive stock targets. It helps sell papers, but the reality is much more banal. (He could still earn that much if he can get the stock price to triple in the next year or two, but we all know the likelihood of that happening).

mrjin 4y ago

Being on Intel platform for two decades and I just moved to AMD not long ago.

rektide 4y ago

Intel's actually been making pretty slick cores, especially given that it's 10nm+++ ("Intel 7"). Integrated Xe was a huge boost to graphics. Thunderbolt 4 on chip is exceptional; short-range 40Gbps networking on every computer with naught but a cable. The 10-, 11-, 12-, 13- series have each been pretty good improvements in various ways. They were way ahead of the curve with Foveros & EIMB, for assembling multiple chips, but haven't really started ramping up either as consumer-imapcting-products anywhere near as well AMD has (which is a shame because Lakefield was an awesome ultra-mobile chip that did great against the Snapdragon competitor, and had such a tiny footprint with onboard RAM). I'm really hopeful & looking forward to seeing what happens once they get their EUV fabs cranking out chips & hopefully continuing to improve their nodes. But I really do fear that chip-buying may be going down, and what that means the computing industry. Mass-volume chips fed scale & competition, made chips cheap & accessible & kept them progressing, kept inventory going down & making new good stuff necessary.

mrjin 4y ago
Large ship takes longer to turn around. What we can see now was something from maybe over a decade ago. Especially PCs are now with more than enough processing power. Once people decided to go for AMD or even arm, they are highly unlikely to buy any PC(Intel ones in particular) in the next a couple of years, no matter how good or how bad it might be.
- rektide 4y ago
  Honestly given how ARM has generally been doing in laptop/internet device space, I kind of expected a lot more blowback & return to x86. For absolute battery life, ARM has been a winner. And that counts for a lot. But man, it is only very very recently I'd even start to consider an ARM chromebook or small laptop, because they've just been really really slow by compare (with Apple as an obvious & notable exception on iPad in particular for a long time now). It always felt like there was a missing story. That we lost a more gutsy, broadviewed computer media that could tell us what was what & make it clear: these laptops are just way way less than what you might be used to or expect. They're pretty decent, they work ok, but wow are you making a lot of sacrifices. The top tier Snapdragon 8's with X2 and X3 are at least vaguely competitive, but they're brand new, on mostly flagship devices, and rare. ARM has taken a decade of being really bad to bad to finally get a couple options that qualify as ok.

greatgib 4y ago

This is what is happening when they can't use anymore anti competitive monopolistic practices to push/force their products against more innovative/efficient competitors.