Intel has unveiled an extensive restructuring programme, announcing $18.7bn in charges as the technology giant aims to revitalise its competitive position in the global chipmaking industry. The company’s shares surged 10 per cent in after-hours trading, buoyed by better-than-anticipated quarterly results.
The Silicon Valley stalwart’s revenue forecast of $13.3bn to $14.3bn for the current quarter, coupled with projected pro forma earnings per share of 12 cents, exceeded Wall Street’s expectations of $13.6bn and 8 cents respectively. These figures have provided a welcome respite for investors following a challenging year.
The substantial charges comprise $2.8bn in restructuring expenses, linked to a previously disclosed reorganisation initiative targeting annual cost reductions of $10bn. The remainder includes $15.9bn in impairment charges related to equipment and goodwill writedowns.
Chief Financial Officer David Zinsner attributed $3.1bn of the charges to equipment writedowns associated with the Intel 7 manufacturing node, reflecting the company’s overoptimistic assessment of post-pandemic demand. “A significant portion of the equipment remained unopened, awaiting deployment,” Zinsner explained.
Despite reporting a non-GAAP loss of 46 cents per share against analysts’ projected loss of 2 cents, Intel’s quarterly revenue decline of 6 per cent to $13.3bn exceeded market expectations. The company maintains its development trajectory remains on schedule, particularly concerning new chip launches including the AI-focused Lunar Lake and server-oriented Granite Rapids.
The positive market response offers temporary relief following a challenging period that saw Intel’s stock value plummet by 55 per cent this year, including a dramatic 26 per cent single-day decline after its previous earnings announcement.
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