Intel lost $2.8 billion last quarter due to disappointing chip sales

Intel earned 134 percent less in the first quarter of this year than a year earlier. The company lost $2.8 billion, while it earned $8.1 billion last year. Demand for chips is still disappointing, resulting in Intel’s biggest quarterly loss ever.

Intel writes that in its quarterly report over the first three months of the year. Still, the company is not dissatisfied; the revenue expectation has still been exceeded, says chief financial officer David Zinsner. The company had expected revenue of $11.04 billion in the first quarter, but that turned into $11.7 billion. Intel previously expected the decline to lead to a 40 percent drop in revenue. Still, the decline is large; in the first quarter of 2022, the company posted sales of $18.4 billion, representing a year-over-year decline of 36 percent.

Even greater was the absolute and relative loss in net income. In the first three months of last year, profits were still $ 8.1 billion, but in the same period this year there was a net loss of $ 2.8 billion, a decrease of 134 percent. Never before has Intel seen such a sharp fall in profits.

Intel expects chip sales to improve over the course of this year. The company plans to save $3 billion in costs this year and wants to increase this to at least $8 billion per year from 2025. Intel had already reduced production, but production still exceeded demand.

At the Client Computing division, the CPU arm of the company, sales fell by 38 percent to $ 5.8 billion. That division’s sales fell so much because there was according to Intel less demand for CPUs among consumers and educational institutions, explains CEO Pat Gelsinger. The ‘Data Center and AI’ division also suffered significant losses. For example, that division booked a turnover of 3.7 billion dollars, 39 percent less than a year earlier. Intel’s smaller branch, Mobileye, did grow. With $ 458 million, sales increased by 16 percent.

Intel expects sales of at least $11.5 billion for the coming quarter. That would be a 22 percent decrease in revenue compared to a year earlier. Intel attributes the losses mainly to the continued weak demand for chips, although the company expects PC sales to stabilize in the coming period.