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Intel to boost gross margins – new products must deliver 50% gross profit
- 0cf8612b2e1e 1y agoI read the title and all I could think of was Michael Scott, “I declare bankruptcy!” Hoping to will reality to your need. More seriously, isn’t this signaling that all experimental R&D is out? Nothing but incremental progress can deliver anything but an approximation of profit margin.
- impish9208 1y agoI think Robert California telling Andy Bernard to double profits by the following quarter would also fit here.
- oarla 1y agoI think this is a better fit. Just need an incredible string of good luck in a trivia night to make it a reality!
- sheepscreek 1y agoDouble, or nothing!
- AstralStorm 1y agoNothing it is, then.
- sheepscreek 1y agoSuch is Intel’s fate off late. They have promising consumer grade GPUs and excellent low power N* CPUs but they face an existential crisis now.
- Havoc 1y agoThe falling margin is a consequence of falling competitiveness. I don’t think you’ll arrest that by decreeing high margin only going forward. But sure give it a go and see I guess. This likely means they’ll kill their GPUs? Don’t think those are particularly profitable
- SlowTao 1y agoSounds about right, it looked like they were a loss leader trying to get a foot into the space. They have been vaguely successful in getting a small toe in the door of GPU's, but not enough to justify the costs.
- scosman 1y agoProfitable != margins. GPU folks can at least make a case that GPUs can be high margin (points at nvidia stock and shrugs). Some businesses where all competitors are selling at low margins that isn’t possible.
- 0cf8612b2e1e 1y agoGPUs seem like a space ripe for investment, but this kind of management decree might make follow-up impossible. Do what neither AMD or NVIDIA will: sell me a card with oodles of RAM. Could operate at speeds two generations removed from current top tier and it will still sell.
- cjbgkagh 1y agoMy google fu is failing me but this sounds a bit like Marissa Mayer’s no more small ideas at Yahoo memo. Also if I was a competitor this would let me know just how hard I would have to compete for Intel to give up.
- ACow_Adonis 1y agoSo i guess overnight we have a new floor for unempirical projections of future project profit :D A lot of made up numbers now have a min(50.0) equivalent somewhere :P
- bilbyx 1y agoLooks like Intel is going the same way as Boeing - focus on only shareholder value.
- TheRealPomax 1y agoYou mean mcdonnell douglass. Who went "we both know who's on top here" when they merged, immediately put all of its own people in positions of power, and then effectively destroyed boeing from the inside out in order to maximize shareholder value, until only their name was left and some 350 people were in literal body bags.
- bilbyx 1y agoI agree that the bean counters from McDonnell Douglas played a big role in Boeing's decline. but it's important to remember that the merger was a negotiated one, not a hostile takeover. Still, it's sad to see how many once-great engineering companies - like DEC, HP, SUN - have been brought down by poor leadership.
- ThrowawayR2 1y agoBut what does that actually mean in terms of strategy? Server and enterprise products have the highest margin. Normal consumers, aside from the small gaming segment, are price sensitive. Are they shifting away from the consumer PC market?
- hedora 1y agoPresumably, they’ll need to abandon cloud and hyperscalers too. That leaves legacy enterprise. (ARM or AMD are going to have better $/perf, and be closer to the dev workstations/laptops, so the only thing Intel would have left is inertia.) If they actually execute this strategy, sales implode and the CEO is gone. If they don’t, he demonstrated he can’t set policy, so he’s gone.
- hakfoo 1y agoPerhaps they're looking at specific empty slots in the competitive product lineup and doubling-down there. I'm sort of surprised, for example, that LTS embedded is not more of a thing. Sell something like those little N50/100/150 mini-PCs, (or more likely an ITX mainboard with the same specs) but for an astronomical price and guarantees "we'll stock and support it for 10 years" for firms who need certifiable fixed platforms. Small volume but probably easy to get name-your-price margins.
- t0mas88 1y agoAnecdata, but looking at the higher end of the "normal people" market Intel has already lost. It's macbooks everywhere. The only non-apple notebooks I see are either for cost reasons or tech experts that want more contol (a small group) And Apple is silently reducing prices by making the cheap Macbook Air close in specs to the Pro. So they're likely to start taking more and more of the midrange market as well.
- surgical_fire 1y ago> The only non-apple notebooks I see are either for cost reasons or tech experts that want more contol (a small group) You forgot gamers. I know plenty of people with beefy and expensive notebooks that are not Apple.
- 486sx33 1y ago[dead]
- walterbell 1y ago100 comments, https://news.ycombinator.com/item?id=44611098 https://news.ycombinator.com/item?id=44611098 > After years of innovation and community collaboration, we’re ending support for Clear Linux OS. Effective immediately, Intel will no longer provide security patches, updates, or maintenance for Clear Linux OS, and the Clear Linux OS GitHub repository will be archived in read-only mode.. Intel remains deeply invested in the Linux ecosystem, actively supporting and contributing to various open-source projects and Linux distributions to enable and optimize for Intel hardware.
- cedws 1y agoIt's a shame but I've never heard of anybody using it to be honest.
- walterbell 1y ago> never heard of anybody using it 5 million downloads of the Docker image, https://hub.docker.com/_/clearlinux/ https://hub.docker.com/_/clearlinux/ It was a reference distro for performance optimizations, which will hopefully find their way into upstream projects and mainstream distros, https://www.phoronix.com/news/Intel-Ends-Clear-Linux https://www.phoronix.com/news/Intel-Ends-Clear-Linux Clear Linux has delivered many great out-of-the-box performance optimizations for Linux systems and shown what can be done for packaging with profile guided optimizations / link-time optimizations, various kernel tweaks, and other innovations over the years. At least the likes of CachyOS have picked up some of these optimizations. Intel engineers are also working with other major Linux distributions on enhancing their Linux distribution performance too.
- cedws 1y agoOver the lifetime of CL that’s not very much. Docker pulls isn’t a great metric either because images tend to get pulled repeatedly in CI pipelines.
- bravetraveler 1y ago
- roenxi 1y agoThis article doesn't seem to actually report anything. It is obvious that no company can arbitrarily choose its own profit margins or they wouldn't stop at 50%. So basically all we have here is the Intel CEO says he wants Intel to be profitable and they're going to prioritise products they think are more profitable than others. I hope this isn't news. The only thing I can spot in the article that wouldn't come up in a psychic's cold read is speculation that there might be a 20% layoff coming hidden towards the end. I'd suggest reading this sort of article is a waste of attention better spent elsewhere.
- zetazzed 1y agoCompanies can choose their gross margins! Just take the cost of manufacturing, double it, and call that your price. You now have 50% gross margins. But you can't choose your total profit. Maybe almost nobody buys at this crazy price you've set. Now your margins don't seem so clever...
- pjmlp 1y agoThey surely can, this is how we usually end up with layoffs affecting people that were doing their jobs as best as they could. MBA influenced shareholders set random profit margins, when the fiscal year comes to an end and the targets weren't met, a selected random set of employees gets punished due to missing the desired margins. Yep, I already went through this %@#££! a couple of times, and seen also happen to others.
- ksec 1y ago>Lip-Bu Tan is "laser-focused" on getting Intel back to maximizing shareholder value I am guessing this is the board's decision again. Zen 6c is about to come out for server. That is 256 Core per socket. I haven't followed Intel's roadmap for a long time, mostly due to it be very confusing and not exciting. But I am not even aware of any grand plans with TSMC. Which means they are betting their foundry to deliver, both on cost, capacity, and performance. But AMD needs to work harder. I have been saying this for so many years it is tiring. They need to further increase market shares in every single market, Servers especially hyperscalers, PC, Laptop, OEMS players. I have given them benefits of doubt for so many years Zen 6 generation will be the last of it. I am not even mentioning GPU.
- TheRealPomax 1y agoLiterally anything a public company does is a board decision. That's how boards work. They say what to do, and if the CEO disagrees, the board votes to dismiss them and put someone in the position who can follow instructions.
- mullingitover 1y agoOne huge factor in Apple’s historic turnaround with SJ’s return to the company: the bailout funders fired the board and brought in SJ’s hand picked board to rubber stamp his decisions. The Tesla board is a similarly mindless rubber stamp operation, for better or worse.
- eviks 1y agoThat's not true, have you never heard of CEOs packing the boards? Also, boards are in charge of a tiny % of all decisions, so it's the opposite of your "literally"
- patrickhogan1 1y agoYes the company that has the least competitive, least desired chips, must either raise its prices or cut costs by reducing support to get higher margins! That’s the real issue!! /S Throw the financial people out. Get the builders and chip designers back in control. Andy Grove is rolling in his grave. FFS.
- wolpoli 1y agoThis is the type of thinking that got Intel to sell their arm CPU product line.
- Animats 1y agoIntel CEO: "Twenty, 30 years ago, we were really the leader. Now I think the world has changed. We are not in the top 10 semiconductor companies."[1] Ouch. Although Investopedia rates them as #5. [1] https://www.tomshardware.com/tech-industry/intel-ceo-says-its-too-late-for-them-to-catch-up-with-ai-competition-claims-intel-has-fallen-out-of-the-top-10-semiconductor-companies-as-the-firm-lays-off-thousands-across-the-world https://www.tomshardware.com/tech-industry/intel-ceo-says-it...
- deadbabe 1y agoOr else what?
- shmerl 1y agoKilling R&D is usually the direct result of such "focus" which leads to dead end anyway.
- bilbyx 1y agoI felt like Intel was slowly making progress, but the board was too impatient and let Pat Gelsinger go too soon. I don't understand why Lip-Bu Tan would be a better choice than Gelsinger.
- ryao 1y agoYou just need to look at Intel’s stock performance under Gelsinger to see why Gelsinger was let go. His loss of a 40% discount on 3nm from TSMC for upsetting them also did major damage to profits.
- selimthegrim 1y agoApparently, he also volunteered Qualcomm as a customer before they agreed to it and blew a bunch of money buying the high NA EUV machines when TSMC didn’t even have them in the roadmap
- bilbyx 1y agoStock price alone doesn't tell the full story. Pat Gelsinger was brought in to fix long-term structural issues at Intel - things like rebuilding its foundry competitiveness and securing leading-edge node capabilities. These aren't quick fixes and takes years to pay off. Yes, the TSMC discount issue hurt, but that also speaks to broader industry tensions and strategic missteps that predates Gelsinger. Letting him go before the turnaround had a chance to work seems shortsighted.
- ryao 1y agoThe stock lost 2/3 of its value under his tenure. After nearly 4 years and a minor recovery in the stock’s value that was reversed into a new 10+ year low for reasons that were almost entirely the CEO’s fault, I expect most boards of directors would lose confidence in the CEO and fire him. Pat Gelsinger killed the royal cores project which handed CPU dominance to AMD. Without leadership in CPUs to keep the company going, there would be no Intel. They reportedly lost their entire Oregon design team to a startup developing RISC-V processors as a result of the cancellation, which will have repercussions for many years. Intel’s stock had been on a small recovery until Zen 5 made it clear that Intel could no longer compete with AMD CPUs on performance, which caused the stock to crater. The power management bugs that were killing nearly all of the high end rocket lake CPUs just prior to this also did not help, as they erased some of the gains during the recovery, before it was entirely wiped out by Intel’s lack of competitiveness against Zen 5. There was nothing in Intel’s pipeline to compete with Zen 5, because Gelsinger had cancelled the project that could compete with Zen 5. The loss of the TSMC discount did not predate Gelsinger. TSMC pulled the discount directly in response to comments made by Gelsinger that they considered disrespectful. This became public knowledge. As I recall, there had been a rumor/leak around summer of 2024 that the board had been very unhappy about that. While there were issues that predated Gelsinger, he did nothing to fix them. There is a great writeup on that here: https://bcantrill.dtrace.org/2024/12/08/why-gelsinger-was-wrong-for-intel/ https://bcantrill.dtrace.org/2024/12/08/why-gelsinger-was-wr... The only thing that predates Gelsinger that Gelsinger cannot be considered responsible for failing to fix is Intel’s reputation as an IP thief from the 80s and 90s. It is likely a major reason nobody wants to use Intel’s foundries.
- tracerbulletx 1y agoMe before a basketball game. My team to score more points than the other team, all new shots must go in.
- Arnt 1y agoReminds me of the CEO who said that "from now on we will focus on low-risk projects with huge upside".
- tchbnl 1y ago> Maximizing shareholder value Depressing. Intel is going to die under this guy's "leadership". I wonder what company will swoop in and buy them? I wonder how much his golden parachute will be.
- horns4lyfe 1y agoThey’re just going to offshore a bunch of jobs for a little short term stock sugar rush before the whole thing falls apart
- pengaru 1y agoThat's gonna be tough when you're paying your competitor to make your products for you.
- light_hue_1 1y ago> To reach this, Tan has committed to investing in recruiting and retaining top talent; "I believe Intel has lost some of this talent over the years; I want to create a culture of innovation empowerment." So that means they're going to start paying well and treating people well? Right? Because compared to FAANG Intel is a big paycut. Particularly in ML the gap is quite large.
- recursivecaveat 1y agoReminds me of that talk on steel mills: https://bhc3.com/2009/05/11/when-being-rational-kills-your-business-clayton-christensen/ https://bhc3.com/2009/05/11/when-being-rational-kills-your-b... You give up the low-end of your business over and over until one day you wake up trying to compete on quality for a tiny share of the market with no revenue left to fund it.
- deterministic 1y agoWhat a silly idea. Nobody can predict the future (as Intel has demonstrated many times saying no to iPhone for example). So you need to experiment and try different things to not become a Dinosaur. Not just the obvious things.