Intel posted a $16.6bn loss in Q3 2024, the largest quarterly loss ever recorded by the chip maker.
However, despite the record-breaking loss, the company’s shares rose after the results were published as the $13.38bn in revenue reported by the company beat estimates.
CEO Pat Gelsinger described Intel’s Q3 as a “good step” but acknowledged that the company still needed to “finish the year strong and prepare for 2025.”
In a statement, Intel said its third-quarter results were materially impacted by three impairment charges: $3.1bn related to Intel 7 manufacturing equipment which has depreciated due to its inability to produce advanced process nodes; $2.9bn associated with the "impairment goodwill for certain reporting units," primarily Mobileye; and $9.9bn of deferred tax assets from the previous three years that the company decided to write off.
Charges related to Intel’s wide-sweeping job cuts announced at the end of Q2 amounted to an additional $2.8bn that the company said it was choosing to recognize in Q3, with the total costs related to the layoffs expected to reach $3bn.
Speaking with analysts on an earnings call after the results had been published, Gelsinger said that the company was “on track to [its] greater than 15 percent workforce reduction before the end of the year,” which he said would make Intel a “leaner, faster and more agile company.”
In an October 28 filing with the Securities and Exchange Commission, Intel stated that it had reduced its headcount by 16,500, and the company expects to complete its restructuring process by the end of Q4 2025.
Gelsinger further noted that Intel had also reduced its capex by 20 percent and, with the company’s transition to extreme ultraviolet (EUV) lithography now complete, the launch of its Intel 18A process nodes is now on the horizon. As a result, he said Intel’s teams are “maniacally focused on improving fab productivity, allowing us to produce more with less over time.”
He also confirmed that Intel’s new Arizona fab was on track to begin high-volume production in the second half of 2025, with the company having already moved its EUV tools into the facility.
Overall, year-on-year (YoY) revenue was down six percent, with Intel’s embattled Foundry business down eight percent YoY, posting revenue of $4.4bn. The company’s Data Center and AI (DCAI) business unit fared a little better, posting revenue for the quarter of $3.3bn, up nine percent YoY, while its Network and Edge business rose four percent to $1.5bn.
Although DCAI saw close to double digit revenue increase, Gelsinger said overall uptake of the company’s Gaudi accelerators had been slower than anticipated, due in part to transitional issues between the Guadi 2 and 3. Consequently, he said Intel would not meet its target of achieving $500m in revenue for the product in 2024.
“That said, taking a longer-term view, we remain encouraged by the market available to us,” Gelsinger said, adding that Intel would continue to enhance Gaudi’s “value proposition.”
He also defended the company’s positioning when questioned about what the future could look like for its DCAI unit without a competitive AI product, saying that the CPU is increasingly playing a role in data center AI compute.
“As you go into enterprise AI, we expect to place a more prominent role, databases, embedding, refinement or much more attuned to CPU workloads. And our strategy there is CPU plus accelerator or CPU plus Gaudi,” he said.
