Last quarter, amid turmoil and restructuring, chipmaker Intel announced one of the largest corporate quarterly losses of all time — $16.6 billion, ten times worse than its $1.6B loss the quarter before. But in today’s Q4 2024 and full-year earnings release, Intel’s not hurting as badly: the company just announced a mere $126 million quarterly loss on $14.3 billion in revenue, and its executives are talking about simplifying the company so it can win in the future.
The company isn’t in great shape despite the staunched bleeding, as its primary businesses were all down this quarter and barely up over the full year (see table below). And if you thought its chipmaking foundries were spending too much back when they lost $7 billion in 2023, well, Intel just revealed the foundries lost nearly double that — $13.4 billion — across 2024.
Some people would argue that foundry money is just the price Intel’s paying to invest in its future, catch up to rivals, and stay the only major chipmaker that designs and fabricates its chips from scratch. And by “some people,” I mean it was ousted Intel CEO Pat Gelsinger’s goal. But now he’s gone, there have been more whispers about Intel spinning off its chipmaking businesses, something Gelsinger somewhat seeded himself.
Today on the earnings call, Intel co-CEO Michelle Johnston Holthaus didn’t commit to either keeping or spinning out the foundries, but hinted that “Intel Foundry will need to earn my business every day, just as I need to earn the business of my customers.” Either way, she seems to see them as a pair: “A stronger Intel Products combined with a more competitive Intel Foundry is a recipe for success overall.” Interim co-CEO David Zinsner says building that competitive foundry is still the goal.
Intel says its foundry business is doing better anyhow, with reduced losses of $2.3 billion last quarter, expected “financial improvements” coming next year as it ramps production of its extreme ultraviolet lithography (EUV) chips, and a plan to hit “op inc break-even” by the end of 2027. Intel was also the largest recipient of the CHIPS Act, though that amounted to single-digit billions worth of government funding for its foundries: $7.68 billion, of which it’s received $2.2 billion so far.
Intel says its all-important 18A process, which uses EUV, will produce chips in volume in the second half of next year. (That’s when Panther Lake, the successor to its Lunar Lake laptop chips, will arrive.) But a follow-on chip, Nova Lake, sounds like it’ll be a mix of Intel and non-Intel manufacturing. “You’ll actually see compute tiles inside and outside again, it’s about optimizing to what allows us to win in the market,” says Holthaus on the call.
Intel is also hurting in the great race for AI chips, with its Gaudi far behind Gelsinger’s goals, and Holthaus admits the company’s not doing well in the AI data center. “I am not happy with where we are today,” she said on the call, admitted that “we’re not yet participating in the cloud-based AI data center market in a meaningful way.”
To help speed things up, she says Intel is canceling its next big AI chip, codename Falcon Shores, and keeping it “as an internal test chip only without bringing it to market.” She says the plan is to “simplify our roadmap and concentrate our resources.” The company will focus on Jaguar Shores, a “system-level solution at rack scale,” instead, with the goal of building that entire solution rather than just the chips.
She also hinted that Intel might aim to be less pricy than the Nvidia AI competition, with the “most compelling total cost of ownership,” similar to what we’d heard from AMD.
Overall, Holthaus says she thinks about Intel’s future products in “three buckets”: client and edge, traditional data center, and AI data center, and she plans to simplify Intel’s business as a result. “We cannot be all things to all people,” she says. “We are prioritizing areas where we can drive differentiated value.” Within its core businesses, though, Holthaus says the company will “fight for every socket” where an Intel chip can go.
“We need to be aggressive, we need to win share, and we need to show our customers they can win with us,” says Holthaus.
Over the full year, Intel lost $18.76 billion on $53.1 billion in revenue. Intel says it has nothing new to share about the search for a permanent CEO, save that the search is progressing. Meanwhile, the company seems to be laying off just as many employees as promised: by the end of 2024, it had 15,000 fewer employees than it did the previous quarter, the company confirmed today.
This was the first Intel earnings call from Intel’s new interim co-CEOs, one of whom promised at CES 2025 that the company’s actually still committed to graphics, though we didn’t hear much else about graphics on today’s call.
