Intel Posts Disappointing Earnings... "Semiconductor Supply Shortage to Continue Until 2024"

Pat Gelsinger Intel CEO
Photo by AP News

[Asia Economy Reporter Jeong Hyunjin] American semiconductor company Intel received a disappointing report card due to a decline in PC demand from January to March this year. Pat Gelsinger, Intel's Chief Executive Officer (CEO), predicted that the semiconductor supply shortage would last longer than initially expected and continue through 2024.

According to Bloomberg and other sources on the 28th (local time), Intel announced that its fiscal second-quarter revenue (December 26 last year to April 2 this year) was $18.35 billion (approximately 23.4 trillion KRW), down 7% compared to the same period last year. This was below the market forecast of $18.5 billion. Net profit increased by 141% year-on-year to $8.1 billion.

Intel explained that the poor performance was influenced by a slowdown in PC demand due to rising inflation. The Client Computing Group, responsible for PC semiconductors, recorded revenue of $9.3 billion, down 13% from the same period last year. According to market research firm Gartner, PC shipments in the first quarter of this year decreased by 6.8% compared to the first quarter of last year. CNBC reported that demand for consumer and education PCs and laptops, which had been strong during the two years of the COVID-19 pandemic, declined, and Apple’s decision to produce its own PC processors reduced Intel’s PC semiconductor sales.

Additionally, Intel’s Data Center Group revenue increased by 22% to $6 billion but fell significantly short of market expectations of $6.91 billion. Intel stated that uncertainties remain high due to Russia’s invasion of Ukraine and China’s COVID-19 lockdown measures, warning that prolonged lockdowns in China could impact performance.

In this earnings announcement, CEO Gelsinger provided a new outlook, stating that the semiconductor supply shortage will continue through 2024. This extends the previous forecast made in July last year by one year. He said, "There is a supply-side issue as the shortage of semiconductor manufacturing equipment negatively affects the industry's efforts to increase supply through expanded production capacity."

However, CEO Gelsinger emphasized that this situation will not adversely affect new factory constructions planned in the US, Europe, and other regions over the coming years. He announced plans to invest $27 billion in new factory construction and equipment. Bloomberg reported, "CEO Gelsinger and Intel’s Chief Financial Officer (CFO) Dave Zinsner now face questions about how these massive investments will impact the company’s profits."

Meanwhile, Samsung Electronics, which announced its first-quarter earnings the day before, recorded 26.87 trillion KRW in semiconductor revenue. This is the first time Samsung Electronics’ quarterly semiconductor sales have exceeded 26 trillion KRW. Thanks to the memory semiconductor boom last year, Samsung Electronics surpassed Intel to reclaim the top spot in global semiconductor sales after three years. Samsung Electronics, Intel, and Taiwan’s TSMC are fiercely competing in the semiconductor market.

This content was produced with the assistance of AI translation services.