On January 26, 2024, Intel released its fourth quarter financial report for 2023. The data showed that Intel's revenue for the fourth quarter of 2023 was $15.41 billion, higher than analysts' expectations of $15.17 billion, a year-on-year increase of 10%. This is the company's revenue growth report after multiple consecutive quarters of revenue decline.
The financial report shows that Intel's net revenue in the fourth quarter was $2.7 billion, an improvement from a net loss of $700 million in the same period last year. The gross profit margin is 48.8%, a year-on-year increase of 5%, which is 2.3% higher than analyst expectations.
However, in the face of the first quarter of 2024, Intel has given a relatively pessimistic revenue forecast, with the company predicting a revenue range of $12.2 billion to $13.2 billion, far from the average forecast of $14.25 billion by Wall Street analysts. As a result, Intel's stock price fell more than 10% after hours, and as of press release, Intel's stock price was reported at $49.55 per share.
Looking down on the gross profit margin of outsourced industrial services
Currently, Intel is striving to enter the chip manufacturing contract manufacturing market. On the 25th, Intel and Unicom jointly announced that they will develop and manufacture a 12nm process platform at Intel's Arizona plant in the United States to meet the rapidly growing demands of the mobile, communication infrastructure, and network markets. The platform is expected to be put into production in 2027.
According to its financial report, Intel's revenue from its chip manufacturing outsourcing business in the fourth quarter of 2023 was $291 million, a year-on-year increase of 63%. However, the gross profit margin indicates that the efficiency of Intel's chip factories needs to be improved. Intel expects the company's gross profit margin to be 44.5% in the first quarter of 2024, which is slightly lower than analyst expectations of 45.5%, and there is a significant gap with Intel's gross profit margin of over 60% in earlier years.
Intel's goal is to become one of the top players in the global wafer foundry market, with TSMC and Samsung Electronics being the company's targets. However, in order to compete with TSMC for market share, in addition to actively expanding production capacity, efficiency issues are also something Intel naturally needs to face. Intel Chief Financial Officer David Sinsner stated that Intel has reduced costs by $3 billion in 2023, "and we expect to further improve efficiency in 2024."
Profit and loss realization of data center PC business
In addition to wafer foundry, Intel is also fully betting on its artificial intelligence computer (AI PC) business. During the 2024 International Consumer Electronics Show (CES) held earlier this month, Nvidia, Intel, and AMD, the three major chip giants, competed to release new products, making AI PC an important part of the industry's pursuit.
The financial report shows that Intel's personal computer chip business revenue in the fourth quarter was $8.84 billion, a year-on-year increase of 33%.
Sinsna said that the personal computer market is getting rid of excess inventory, and its largest customer is reordering components. Intel CEO Pat Kissinger said that the total shipment of personal computers will reach about 300 million units, mainly due to the high demand for new machines that can better handle artificial intelligence software and services.
Although Intel's long-term performance is expected to be supported by the recovery of the artificial intelligence and personal computer markets, some of the company's current businesses still face challenges. Intel's data center business revenue in the fourth quarter was $4 billion, a year-on-year decrease of 10%, lower than the average analyst expectation of $4.08 billion.
Such revenue data has raised concerns in the market that Intel may lose its original foothold in the lucrative data center chip market. In the server market, Intel once dominated the market, but now it faces challenges from AMD, Amazon's AWS, and Microsoft.
In response to this, Kissinger stated during the earnings conference call that Intel's core business is healthy and has not experienced any market share losses. The company's server market share is stabilizing. However, the programmable chip division will continue to experience a pullback until the second half of the year. He stated that the problems faced in the first quarter were temporary, and it is expected that the company's performance will resume growth. Intel is still on the right track to regain its processor title. He also stated that "the fourth quarter marks a year of Intel's transformation progress", which implies that Intel will invest more resources in key businesses in the future.