Intel Slides After New CEO’s Comeback Plan Worries Investors
(Bloomberg) -tel Corp.’s shares, CEO Lip-This Tan fell by 8.5% on Friday.
As part of Intel’s second quarter report, Tan said that the company would cancel some factory projects and will take a more conservative approach to future expenditures. Tan, his predecessor Pat Gelsinger sought investments that started extremely and unhealthy.
“If you build this, I am not subscribing to the belief in the future,” he said in a conference meeting with analysts.
At the same time, Tan struggled to give a clear picture of how to make the company more competitive. Gelsinger launched an ambitious plan to turn Intel into a chip document, which is a job that makes products for external customers. An important part of this was to move towards a more advanced production technique called 14A. However, on Thursday, Tan pointed out that Intel will temporarily present this technology.
The company said that it would add large -scale capacity to 14A when she is convinced that she has sufficient customers determined to use it. This did not sit well with investors who sent shares for $ 20,70 in New York, which has been the largest one -day fall of stocks for more than three months.
Wedbush Securities Inc. Analysis, Matt Bryson, said, “If you can’t get someone to invest, it’s an intellectual problem that you can get away from 14a,” he said.
The essence of anxiety: If Intel stops bringing new production technology, it comes out of the race for the leadership of the chip industry and closes the book about what has made it untouchable for decades.
Intel’s troubles encouraged speculation that it could be acquired or broken down, although it was not a clear way to a great deal before. Intel’s Taiwan Semiconductor Manufacturing Co. Possible suitors for the factory section have moved away from this idea. Tan also said that Intel aims to keep production and product design businesses together, but plans to evacuate smaller parts.
Intel confirmed that it aims to make the network group an independent business on Friday. The company said it started to define strategic investors without naming. CRN had previously reported about the plan.
In the earnings report, Intel missed the estimates for some profit measures, while optimistic third quarter sales estimate. The margins will be tighter than the Wall Street in the period, and Intel is only waiting for a quarter of a prey. Analysts foresee 4 cents earnings on this basis.
In the second quarter, income has changed slightly compared to the previous year. Analysts foresee 11.9 billion dollars. The company has recorded a share of 10 cents compared to 1 Cent Kar.
Intel’s shares increased by 13% this year until the closing of Thursday. Although this gain is compatible with most chip stocks in 2025, Rivals Nvidia Corp. and Advanced Micro Devices A.Ş. It was removed by artificial intelligence expectations.
The focal point of Tan is to turn Intel’s financial house into order, a task that includes thousands of layoffs and reducing capital expenditures. The company said on Thursday that the already designed factories in Germany and Poland will not continue and that progress will slow down in another project in Ohio.
Intel will reduce capital expenditures on new facilities and equipment this year and plan to make more deductions in this budget next year. Managers said the company would spend about $ 18 billion this year and less in 2026.
Tan, who took over the CEO business in March, admitted that the company is still doing things to make the company more competitive in its main markets: processors for personal computers and servers. It is also preparing a plan to break the AI chip industry, an area dominated by Intel’s Nvidia.
Intel, the third quarter sales will be 12.6 billion dollars to 13.6 billion dollars, he said. On average, analysts predicted a number at the low end of this range.
The company benefited from a resurrection in the PC industry, which was partly due to the efforts of the manufacturers to create inventory before the tariffs were hit. However, the pioneer of the Silicon Valley has lost its market share to competitors and Foundry is struggling to attract its customers.
Intel, Intel’s dismissal plans – announced in the first three -month report – the personnel will decrease by 15%, he said. In an interview, Dave Zinsner, the company’s chief finance officer, said he expects more deductions through wear and division of business units.
The chip manufacturer aims to finish the year with 75,000 employees who have fallen more than 20% since the end of the June quarter. In April, Bloomberg News reported that Intel wanted to roughly cut the labor force.
Analysts expressed their concerns that the PC demand would slow down after a strong first half. The threat of tariffs brought by the United States and other nations by other nations in retaliation may have pushed PC producers to stockbiring before possible cost increases in the last quarter.
Zinsner, demand was better than expected in the last quarter because there was no economic slowdown, Zin Zinsner said. However, the company is aware that some demand can be caused by consumers and enterprises trying to avoid tariffs.
“We felt that the tariffs could be a head wind in the second quarter and will disturb the economy even more,” he said. “None of this has passed.”
Intel’s customer information transaction department generated $ 7.9 billion in the last quarter and overcomes an average estimation of $ 7.3 billion. Data center sales were $ 3.9 billion compared to an estimation of $ 3.7 billion. The casting section generated $ 4.4 billion in accordance with projections.
Intel previously said it plans to reduce operating expenses to approximately $ 17 billion this year and $ 16 billion in 2026.
The most important competitive advantage of Tan’s predecessor Gelinger was once focused on expanding Intel’s factory network. He planned to spend tens of billions of dollars in order to make his plants best again in the industry, a status that will force competitors to use as an outsourced production provider.
On Thursday, we will adopt a different approach to create our documentary business, ”he said to the staff on Thursday. “For the last few years, the company has made a lot of investments without enough demand. In this process, our factory footprint was unnecessarily disintegrated and insufficient. We must correct our course.”
For now, the largest user of its factories is Intel’s internal design teams. Some of Intel’s best offers now contain components made by TSMC and add more pressure on their margins.
The remaining percentage of sales after excluding the production cost – the remaining percentage of sales – was about 30% in the second quarter and will be 36% in the current period. How close is Intel’s chips dominate the data center market. Nvidia has over 70%margins.
Zinsner from Intel, the company is not yet ready to explain the equipment related to AI, he said. The chip manufacturer focuses on the development of products that will fit into the maiden parts of the market.
In a note of an emarketer analyst Jacob Bourne, he said in a note that Intel should understand how to benefit from artificial intelligence.
“A basic market truth is not going,” he said. “The demand for global AI chips continues to rise and Intel should find the foundation in this value chain.”
(Updates shares that starts in the first paragraph.)
There are more stories like this Bloomberg.com
