5 ms·

I figured operating losses were to be expected in this field right now, but this part was surprising: "The unit had revenue of $18.9 billion for 2023, down 31%

by burcs 3y ago

I figured operating losses were to be expected in this field right now, but this part was surprising: "The unit had revenue of $18.9 billion for 2023, down 31% from $27.49 billion the year before." Why would revenue drop so dramatically when chip demand is at an all time high?

bratao 3y ago
I´m an outsider, but most demand in the last months have been GPUs and AI accelerators. And Intel foundries are not making them yet, only the ARC that are not very strong.
- deleted 3y ago
  [deleted]
- zdw 3y ago
  Arc is fabbed on TSMC N6, per https://en.wikipedia.org/wiki/Intel_Arc https://en.wikipedia.org/wiki/Intel_Arc
- LarsDu88 3y ago
  Intel Foundries don't make ARC chips. Those are made by TSMC
- moffkalast 3y ago
  There's been demand for LLM accelerators since late 2022, but so far only the Groq cards have materialized and those aren't really viable for anyone but high end enterprise datacenter use. Literally nobody's making these things yet, Nvidia gaming GPUs remain the best price to performance option lol. Intel Arc only does compute work through Vulkan which is not exactly comparatively fast yet, so despite being well priced for the VRAM they offer they're not seriously considered.
ClassyJacket 3y ago
Sorry if this is a dumb question, but why are operating losses expected? Aren't chips in high demand compared to supply? Couldn't they charge high?
- 101011 3y ago
  Not a dumb question, but because they are so expensive to build, fabs have a high upfront cost before they can start to turn a profit. Oddly, the older a fab is, typically the more money it will make you. It's also a big part of the reason as to why so many fab companies have died out. Building a new fab with the latest tech is extremely expensive. If you have a couple of big swings and misses, you can easily burn a tremendous amount of your capital.
- ravst3s 3y ago
  All Intel did was just report a new operating structure and re-allocate revenue and costs to that segment. So essentially expenses that went into manufacturing before are now just thrown under IFS. It's just a bunch of financial engineering. New Intel financials: https://www.intc.com/filings-reports/all-sec-filings/content/0000050863-24-000068/0000050863-24-000068.pdf https://www.intc.com/filings-reports/all-sec-filings/content... Old Intel financials: https://d1io3yog0oux5.cloudfront.net/_9bece0e2e2052ad835960ec926e1b746/intel/db/887/8982/earnings_release/Q4+23_EarningsRelease_.pdf https://d1io3yog0oux5.cloudfront.net/_9bece0e2e2052ad835960e...
  - mike_hearn 3y ago
    It's not just financial engineering. It's a key step towards their goal of splitting the foundry and design businesses apart. They already manufacture chips they design on other people's foundries, and manufacture chips other people designed on their foundries. That's step one. Step two is to make both sides independently profitable. At some point Intel might conceivably split into two fully separate companies.
- bgnn 3y ago
  IFS isn't producing any silicon for Nvidia. That's in high demand.
aurareturn 3y ago
Intel server chips are not competitive with AMD chips. On mobile, they are not competitive with Apple and soon Qualcomm. Therefore, this drop in foundry revenue stems from the fact that they’re making fewer chips for their in-house design company. Also, as others have said, they’re not making many AI chips due to lack of competitive in house designs and no external customers yet.
- gamepsys 3y ago
  How did that lead to 31% less revenue in one year? It seems like all of this was also true in 2023.
  - tibbetts 3y ago
    I’d imagine longer term contracts not renewing or renewing at lower prices / lower volumes.
  - aurareturn 3y ago
    Why wouldn't it be true in 2024 as well? All the rage is in GPUs and AI accelerators - not Xeon/client CPUs which are Intel's bread and butter.
  - dv_dt 3y ago
    Momentum of batch buys is running out with new buys coming at a cost? If your chips aren’t performance competitive in processing or energy, you have to discount until you hit cost parity.
  - rieter 3y ago
    Their 14th generation CPUs are just overclocked 13th gen. They are raising the thermals and increasing the clock speeds correspondingly.
    - instagib 3y ago
      Most cpu manufacturers do this. Binning, changing product numbers or lines around, and marketing tactics. @GamersNexus on YouTube occasionally does stories on this. Recently they had a good intel slide deck trying to disparage AMD and muddying the water on their own product lines.
ravst3s 3y ago
it's all internal revenue. IFS is charging Intel Products for making chips. 2023 was a down year bc of weaker cloud & IT demand. Outside of NVDA, semiconductor companies had a poor 2023. "Revenue was $18.9 billion down $8.6 billion from 2022. Internal revenue was $18.0 billion, down $9.1 billion driven by lower intersegment volume. External revenue was $953 million, up $479 million from 2022, driven by higher packaging revenue" https://www.intc.com/filings-reports/all-sec-filings/content/0000050863-24-000068/0000050863-24-000068.pdf https://www.intc.com/filings-reports/all-sec-filings/content...
- pclmulqdq 3y ago
  Semiconductors are pretty cyclical in terms of demand, and 2023 should have been a bad year for them. This result may have been surprising in that the magnitude of the dip was worse than expected, but on some level this should have been priced in.
ein0p 3y ago
They aren’t making the chips that are in demand. Neither does AMD for that matter, but AMD does not make its own silicon. Whether that’s prudent, we shall see.
benreesman 3y ago
The other commenters have already more than addressed the internal revenue angle and the fact that Intel is just in a bottleneck any way you cut it. And that it’s a minimum of a year before we know if they make it. But I will add that if they make it (basically that Gelsinger’s fundamentally sound-looking plan proves in fact to be fundamentally sound, and that they let a nerd run Intel long enough to find out), they’re going to be Kobe and Shaq in a bad mood. A reborn Intel stepping into the room and seeing NVIDIA and AMD pillow fighting on top of the biggest pile of semiconductor bucks in the history of conductors or “semi-anything” will be like the “justice is real” scene from pick a Tarantino film.
- transcriptase 3y ago
  Let’s just hope that this time around the they don’t intentionally hold back innovations in favour of slow-dripping a predictable fixed X% gain per year like they did 2014 to 2020 in the absence of competition. Amazing how quickly Intel suddenly started leaping in performance/$ between releases once AMDs 5000 series came out.
  - benreesman 3y ago
    I agree it's a weird world where Intel is our best hope for free, fair, and competitive markets. That's a really fucking weird world. But Gelsinger looks at a cursory glance to be someone who knows how to build chips, has a pretty clear comeback story, and realizes that complacency in a monopoly is what made them uncompetitive in the end, and therefore desperate enough to put a qualified person in charge [1]. I think he might keep the pressure on even if they start winning. [1] https://en.wikipedia.org/wiki/Pat_Gelsinger https://en.wikipedia.org/wiki/Pat_Gelsinger
  - paulmd 3y ago
    > Let’s just hope that this time around the they don’t intentionally hold back innovations in favour of slow-dripping a predictable fixed X% gain per year like they did 2014 to 2020 in the absence of competition. idk why you would cite this as a downside when this is specifically what the tech review community has been begging for with gpus. Having a gen do 40% and the next do 0–10% is grating to consumers and disruptive to the market. What consumers need is exactly this smoothing of generational progression and the removal of huge outliers in terms of generational step. Smooth the curve - which inherently will be much closer to that 15-20% progress generationally, given how slow the transitor tech is moving nowadays. As Tim Hardwareunboxed says - if you don’t have a good uplift, don’t release the product. Intel made sure they had an uplift every year. You can’t change actual progress but it can be smooth.
2OEH8eoCRo0 3y ago
I think if we dissected chip demand by company we would see that TSMC/Nvidia are over represented. Chip demand as a whole can grow while demand for Intel or AMD chips shrink.

by burcs 3y ago

bratao 3y ago

I´m an outsider, but most demand in the last months have been GPUs and AI accelerators. And Intel foundries are not making them yet, only the ARC that are not very strong.

deleted 3y ago
[deleted]
zdw 3y ago
Arc is fabbed on TSMC N6, per https://en.wikipedia.org/wiki/Intel_Arc https://en.wikipedia.org/wiki/Intel_Arc
LarsDu88 3y ago
Intel Foundries don't make ARC chips. Those are made by TSMC
moffkalast 3y ago
There's been demand for LLM accelerators since late 2022, but so far only the Groq cards have materialized and those aren't really viable for anyone but high end enterprise datacenter use. Literally nobody's making these things yet, Nvidia gaming GPUs remain the best price to performance option lol. Intel Arc only does compute work through Vulkan which is not exactly comparatively fast yet, so despite being well priced for the VRAM they offer they're not seriously considered.

ClassyJacket 3y ago

Sorry if this is a dumb question, but why are operating losses expected? Aren't chips in high demand compared to supply? Couldn't they charge high?

101011 3y ago
Not a dumb question, but because they are so expensive to build, fabs have a high upfront cost before they can start to turn a profit. Oddly, the older a fab is, typically the more money it will make you. It's also a big part of the reason as to why so many fab companies have died out. Building a new fab with the latest tech is extremely expensive. If you have a couple of big swings and misses, you can easily burn a tremendous amount of your capital.
ravst3s 3y ago
All Intel did was just report a new operating structure and re-allocate revenue and costs to that segment. So essentially expenses that went into manufacturing before are now just thrown under IFS. It's just a bunch of financial engineering. New Intel financials: https://www.intc.com/filings-reports/all-sec-filings/content/0000050863-24-000068/0000050863-24-000068.pdf https://www.intc.com/filings-reports/all-sec-filings/content... Old Intel financials: https://d1io3yog0oux5.cloudfront.net/_9bece0e2e2052ad835960ec926e1b746/intel/db/887/8982/earnings_release/Q4+23_EarningsRelease_.pdf https://d1io3yog0oux5.cloudfront.net/_9bece0e2e2052ad835960e...
- mike_hearn 3y ago
  It's not just financial engineering. It's a key step towards their goal of splitting the foundry and design businesses apart. They already manufacture chips they design on other people's foundries, and manufacture chips other people designed on their foundries. That's step one. Step two is to make both sides independently profitable. At some point Intel might conceivably split into two fully separate companies.
bgnn 3y ago
IFS isn't producing any silicon for Nvidia. That's in high demand.

aurareturn 3y ago

Intel server chips are not competitive with AMD chips. On mobile, they are not competitive with Apple and soon Qualcomm. Therefore, this drop in foundry revenue stems from the fact that they’re making fewer chips for their in-house design company. Also, as others have said, they’re not making many AI chips due to lack of competitive in house designs and no external customers yet.

gamepsys 3y ago
How did that lead to 31% less revenue in one year? It seems like all of this was also true in 2023.
- tibbetts 3y ago
  I’d imagine longer term contracts not renewing or renewing at lower prices / lower volumes.
- aurareturn 3y ago
  Why wouldn't it be true in 2024 as well? All the rage is in GPUs and AI accelerators - not Xeon/client CPUs which are Intel's bread and butter.
- dv_dt 3y ago
  Momentum of batch buys is running out with new buys coming at a cost? If your chips aren’t performance competitive in processing or energy, you have to discount until you hit cost parity.
- rieter 3y ago
  Their 14th generation CPUs are just overclocked 13th gen. They are raising the thermals and increasing the clock speeds correspondingly.
  - instagib 3y ago
    Most cpu manufacturers do this. Binning, changing product numbers or lines around, and marketing tactics. @GamersNexus on YouTube occasionally does stories on this. Recently they had a good intel slide deck trying to disparage AMD and muddying the water on their own product lines.

ravst3s 3y ago

it's all internal revenue. IFS is charging Intel Products for making chips. 2023 was a down year bc of weaker cloud & IT demand. Outside of NVDA, semiconductor companies had a poor 2023. "Revenue was $18.9 billion down $8.6 billion from 2022. Internal revenue was $18.0 billion, down $9.1 billion driven by lower intersegment volume. External revenue was $953 million, up $479 million from 2022, driven by higher packaging revenue" https://www.intc.com/filings-reports/all-sec-filings/content/0000050863-24-000068/0000050863-24-000068.pdf https://www.intc.com/filings-reports/all-sec-filings/content...

pclmulqdq 3y ago
Semiconductors are pretty cyclical in terms of demand, and 2023 should have been a bad year for them. This result may have been surprising in that the magnitude of the dip was worse than expected, but on some level this should have been priced in.

ein0p 3y ago

They aren’t making the chips that are in demand. Neither does AMD for that matter, but AMD does not make its own silicon. Whether that’s prudent, we shall see.

benreesman 3y ago

The other commenters have already more than addressed the internal revenue angle and the fact that Intel is just in a bottleneck any way you cut it. And that it’s a minimum of a year before we know if they make it. But I will add that if they make it (basically that Gelsinger’s fundamentally sound-looking plan proves in fact to be fundamentally sound, and that they let a nerd run Intel long enough to find out), they’re going to be Kobe and Shaq in a bad mood. A reborn Intel stepping into the room and seeing NVIDIA and AMD pillow fighting on top of the biggest pile of semiconductor bucks in the history of conductors or “semi-anything” will be like the “justice is real” scene from pick a Tarantino film.

transcriptase 3y ago
Let’s just hope that this time around the they don’t intentionally hold back innovations in favour of slow-dripping a predictable fixed X% gain per year like they did 2014 to 2020 in the absence of competition. Amazing how quickly Intel suddenly started leaping in performance/$ between releases once AMDs 5000 series came out.
- benreesman 3y ago
  I agree it's a weird world where Intel is our best hope for free, fair, and competitive markets. That's a really fucking weird world. But Gelsinger looks at a cursory glance to be someone who knows how to build chips, has a pretty clear comeback story, and realizes that complacency in a monopoly is what made them uncompetitive in the end, and therefore desperate enough to put a qualified person in charge [1]. I think he might keep the pressure on even if they start winning. [1] https://en.wikipedia.org/wiki/Pat_Gelsinger https://en.wikipedia.org/wiki/Pat_Gelsinger
- paulmd 3y ago
  > Let’s just hope that this time around the they don’t intentionally hold back innovations in favour of slow-dripping a predictable fixed X% gain per year like they did 2014 to 2020 in the absence of competition. idk why you would cite this as a downside when this is specifically what the tech review community has been begging for with gpus. Having a gen do 40% and the next do 0–10% is grating to consumers and disruptive to the market. What consumers need is exactly this smoothing of generational progression and the removal of huge outliers in terms of generational step. Smooth the curve - which inherently will be much closer to that 15-20% progress generationally, given how slow the transitor tech is moving nowadays. As Tim Hardwareunboxed says - if you don’t have a good uplift, don’t release the product. Intel made sure they had an uplift every year. You can’t change actual progress but it can be smooth.

2OEH8eoCRo0 3y ago

I think if we dissected chip demand by company we would see that TSMC/Nvidia are over represented. Chip demand as a whole can grow while demand for Intel or AMD chips shrink.