News Intel 2Q24 Financial Results

[poke01]

If China were to invade Taiwan, Intel would be the Wests only hope for computing technology production. Even the threat of China invading is enough for Intel not to fail.

If that happened Intel cannot do jack. Intel can’t even produce a laptop SoCs on Intel 4 in volume. There is no way it can support Nvidia, AMD, Apple, Qualcomm etc. the economy will collapse.

 

[gdansk]

Patty G is going to take Intel Products down with it at this rate.

I don't believe it. He, or his CFO, have already prepared for rapid separation if need be. Operating margin for products is viable. Foundry has billions in assets and I guess that's it...

 

[gdansk]

If that happened Intel cannot do jack. Intel can’t even produce a laptop SoCs on Intel 4 in volume. There is no way it can support Nvidia, AMD, Apple, Qualcomm etc. the economy will collapse.

Psh, who needs more than 1200 in GB6 in wartime. Alder Lake N is basically the ideal wartime Ersatzprozessor.

 

[CakeMonster]

If that happened Intel cannot do jack. Intel can’t even produce a laptop SoCs on Intel 4 in volume. There is no way it can support Nvidia, AMD, Apple, Qualcomm etc. the economy will collapse.

Its technically true though. Intel stock would probably rise astronomically, but it would take years to get significant production going for all the new demand and all other areas of the economy would suffer greatly.

 

[jpiniero]

I don't believe it. He, or his CFO, have already prepared for rapid separation if need be.

We're kind of at that point.

 

[gdansk]

We're kind of at that point.

Really? I think they can go quarters without splitting. Maybe even 3 quarters.

 

[QuickyDuck]

Idk, 5N4Y is on track but the cost is too high and there's no sufficient volume.
So yield is probably low and the adjust the standard to make the plan on track?

 

[adroc_thurston]

the cost is too high

Yea.

there's no sufficient volume.

Obviously.

So yield is probably low

It's not a yield issue.
Modern fabs are just capex-intensive and Intel has no cashflow to fund 'em.

 

[NTMBK]

Tiny tiny tiny tiny segment of an already tiny segment of high performance desktops.

$3bn in revenue as of 2018. https://www.pcgamesn.com/dell-alienware-razer-gaming-revenue Smaller than the rest of Dell, but still a decent sized business

 

[misuspita]

I don't think Intel is at the end of the deep well yet. They need to fall farther to feel the real need of internal change. They need to be at around AMD 2007 level, where they need to streamline everything and where internal power infights are forgot and survival of the company is really in danger.

Only then can a healthy Intel recover, IMO.

As for bombing of TSMC Taiwan, if that happens, I'm sure that all of China's active fabs are gonna be transformed into rubble one way or another.

 

[TheELF]

I don't think this accounts for
1) the huge amount of RMA's that will be coming.
2) The result of that lawsuit which is destined to win a big judgement.

If AMD survived the massive RMAs and lawsuit of having exploding CPUs then intel will survive this...Oh wait nobody made a lawsuit against AMD for exploding CPUs?!
But you think they will make one for having to turn down the artificial auto overclock to make a CPU run without crashing anymore?!

AMD has now basically matched Intel's DC revenue ($2.8B for AMD vs $3B for Intel). Next quarter, AMD will probably surpass Intel in DC revenue for the first time ever. Granted, a big part of this is thanks to DC GPUs, but it's still an historical moment and also kind of shows how Intel has failed to anticipate/prepare for the evolution of technology over the last decade or two.

Intel has split DC into DC and network&edge for like a decade now because they failed to prepare for the evolution of arm taking over regular DC.
Combined intel made 4.3bil this quarter so AMD still has a good ways to go.

Maybe those Client operating margins are fictional, based on "Foundry" giving dies to "Products" at fictionally low price.

If you combine Foundry with Client, Foundry lost all the profit Client made.

They showed intel foundry getting 4.3bil this quarter, I don't know if this is fictional low prices, but they then remove the foundry earnings again because it's money from within the company so not real earnings.
So any margin you see on any segment is without the fab changing them.

Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness

seekingalpha.com

Intel Foundry

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[gdansk]

But you think they will make one for having to turn down the artificial auto overclock to make a CPU run without crashing anymore?!

It's more likely than you think.

 

[moinmoin]

Time for the company to be nimble and hungry again.

First it needs to become honest, to itself as well as to its customers.

DIY stuff, not relevant.

The affected Raptor Lake 8+16 die may cover only a small market overall, but for the last two gens it got like 100% of the "Intel performance leadership" mindshare. And Intel's disastrous handling of the current fallout is affecting the whole channel trading those chips, not only DIY.

It's easy to be confident and enthusiastic when all you have to do is show everyone slides about your big plans to bring the company back to being a tech leader and keep promising the future is bright. Once some time passes and you actually have to start being accountable for what is happening, you get somber real quick.

So when is "some time passes" over? Pat is Intel CEO since February 2021, that's more than 3 years, already longer than Bob Swan sat on that post.

 

[Joe NYC]

I look at it like this-- if Ford and GM and Lehman Bros were too big to fail, so is Intel-- especially with what it means to the west. If China were to invade Taiwan, Intel would be the Wests only hope for computing technology production. Even the threat of China invading is enough for Intel not to fail.

China invading Taiwan, or Taiwan re-joining China on its own would not really be a big problem.

The problem is that the US would destroy Taiwan and TSMC on its way out. Chips Act was to shield the US in this scenario.

But given that Chips Act has not really anything from Intel, only a little bit capacity from TSMC in Arizona and Samsung in Texas, the US plans to destroy TSMC's Taiwan fabs are probably being re-evaluated, because the damage to US economy from it would be bigger than damage to Chinese economy.

So, if the US re-thinks the plan to destroy TSMC, the value of Intel (as a savior of Western civilization) disappears.

 

[Joe NYC]

They showed intel foundry getting 4.3bil this quarter, I don't know if this is fictional low prices, but they then remove the foundry earnings again because it's money from within the company so not real earnings.
So any margin you see on any segment is without the fab changing them.

Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness

seekingalpha.com

Intel Foundry

$

4,320

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4.3 billion is Foundry revenue. But its expenses are 7.1 billion, resulting in loss of 2.8 billion.

Now, looking at Client, client is showing profit of 2.5 billion. So. Foundry eliminates all of Client profits and then some.

 

[gdansk]

China invading Taiwan, or Taiwan re-joining China on its own would not really be a big problem.

As if the latter will happen. And the first means war, which is in fact the problem. War around an island generally leads to interruption of trade and destruction of valuable property especially if it can produce war materiel.

 

[Joe NYC]

Quick tidbits from the call:

1. Lunar Lake fabrication was "almost entirely outsourced".

Intel explained the original plan for Lunar Lake. It was tailored to cover only a small segment / niche of very low power thin and light. A new segment for Intel, something equivalent to Mac Air.

The intention was to establish Intel in this segment at whatever the cost would be and later, to capitalize with Panther Lake.

The problem is that MTL sucks, and now Intel needs Plan 2 for MTL sucking, which is Lunar Lake in greater volume.

But since Lunar Lake was to be only demonstration project, not a volume product, regardless of cost, now Intel is stuck trying to ship very expensive chip to higher volume (assuming TSMC will offer Intel more capacity).

1. On-package memory also will hurt Lunar Lake margins.

It will hurt margin percentage, not margin dollars.

Intel management, and certain financial analyst had a fetish of margin percentage, which lead to Intel destroying / divesting itself from number of market segments, rather than continue to sell lower margin percentage, while still earning margin dollars.

So, this is not really a problem for Lunar Lake, other than analysts beating Intel over the head with this.

1. Biggest CCG margin killer: Meteor Lake was designed to ramp on Oregon fabs. But Intel made a late-breaking switch to Ireland fabs: problematically, Ireland fabs have "a much higher wafer cost" and costs will stay higher in the next quarter.

This was not fully explained why Intel moved the production, but I think the hint was that Ireland fab can produce higher volume, while Oregon fab is more research oriented.

We can speculate why, what is pressing Intel to manufacture more MTLs than originally planned, even when such a change of plan is very costly.

I think the reason may be Raptor Lake instability. Why else would Intel want to maximize production of MTL, even though MTL is not the most successful or most profitable chip. It's because MTL is not RPL.

 

[jpiniero]

Intel posted the 10-Q... Notebook and Desktop volume were up 11%. Desktop ASP went down although it was only 4%.

Data Center volume was down 22% but ASPs were up 23%. Selling a lot less of cheaper products to Cloud apparently.

 

[Markfw]

If AMD survived the massive RMAs and lawsuit of having exploding CPUs then intel will survive this...Oh wait nobody made a lawsuit against AMD for exploding CPUs?!
But you think they will make one for having to turn down the artificial auto overclock to make a CPU run without crashing anymore?!

Intel has split DC into DC and network&edge for like a decade now because they failed to prepare for the evolution of arm taking over regular DC.
Combined intel made 4.3bil this quarter so AMD still has a good ways to go.

They showed intel foundry getting 4.3bil this quarter, I don't know if this is fictional low prices, but they then remove the foundry earnings again because it's money from within the company so not real earnings.
So any margin you see on any segment is without the fab changing them.

Intel Reports Second-Quarter 2024 Financial Results; Announces $10 Billion Cost Reduction Plan to Increase Efficiency and Market Competitiveness

seekingalpha.com

Intel Foundry

$

4,320

Intersegment eliminations

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)

First, there IS a lawsuit. And its not for what you say, the chip degrades and becomes unusable.

Edit: One is 20 years ago and dependant on the cooling device be removed. The other situation is totally at stock and it becomes totally unuseable and fails.

Second, the stock price and financial results of the two companies is evident. I don't think I need to say anymore.

 

[cytg111]

Chips Act II

 

[KompuKare]

Chips Act II

Welfare = bad.
Corporate welfare = good.

 

[maddie]

China invading Taiwan, or Taiwan re-joining China on its own would not really be a big problem.

The problem is that the US would destroy Taiwan and TSMC on its way out. Chips Act was to shield the US in this scenario.

But given that Chips Act has not really anything from Intel, only a little bit capacity from TSMC in Arizona and Samsung in Texas, the US plans to destroy TSMC's Taiwan fabs are probably being re-evaluated, because the damage to US economy from it would be bigger than damage to Chinese economy.

So, if the US re-thinks the plan to destroy TSMC, the value of Intel (as a savior of Western civilization) disappears.

Welcome to Wacko World said the sign. Only in an insane world would Intel failing be better for world peace, but here we are.

 

[MoistOintment]

Maybe those Client operating margins are fictional, based on "Foundry" giving dies to "Products" at fictionally low price.

If you combine Foundry with Client, Foundry lost all the profit Client made.

Foundry is now selling to CCG at the same prices they would external customers rather than the fictitiously high prices they were before. Intel's internal demand isn't enough volume for their current Foundry ambitions to be profitable, plus foundry's massive R&D and expansion investments to build out IFS2.0 = terrible foundry margins, somewhat decent CCG margins.

This is more close to reality than in the past when Foundry's net loss could be obfuscated by CCG/DCAI covering their losses.

Leading node development just requires obscene amounts of volume to be profitable and until Foundry gets some external customers on 18A, 14A, Intel 3, and Intel 16, they just won't have the volume for that profitability (hence the 2030 estimated ROI)

 

[Josh128]

Welcome to Wacko World said the sign. Only in an insane world would Intel failing be better for world peace, but here we are.

If by "better for world peace", you mean "in the peaceful aftermath of another world war", then I understand. Intel not failing would potentially allow for WW3 to not happen. Thats the point.

 

[Tuna-Fish]

Weird. I didn't net assets and liabilities but doesn't book value now exceed that?

Their book value includes $200B of Gross PPE. That is, all their factories and their equipment. But this book value is based on what they paid for them, reduced by a fixed depreciation schedule, and does not necessarily reflect what they are actually worth right now.

If, for example, their bad margins are caused by it just being more expensive for them to produce a given piece of silicon compared to TSMC (which it always has been, but it used to be that Intel processes performed better, so it was worth it), and if this gulf is so high they will be unable to compete in the market at prices they can afford (which will continue to be true until either they manage to seriously cut the costs of producing chips, or they again are able to produce chips that are sufficiently better that they are worth the extra cost), the realistic value, as opposed to cost of their PPE could be much lower. You are certainly not getting anywhere near their book value if you just split Intel into parts.