[News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25

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Intel posted its third-quarter earnings earlier on October 31. Recording a lackluster performance with quarterly revenue declining 6% year-over-year to USD 13.3 billion and a net loss of USD 16.99 billion, the struggling giant manages to impress the market with an upbeat guidance for the fourth quarter, with revenue expected to rise to USD 13.3 billion to USD 14.3 billion, according to its press release.

According to a report by Reuters, the better-than-expected outlook originates from the company’s optimism about its future of PC and server business.

As a leading PC chipmaker, Intel has seen a boost from the introduction of on-device AI features and a new Windows update cycle, which has rekindled demand for PCs following a prolonged slump. This has helped Intel exceed Wall Street’s modest expectations, according to Reuters.

New External 18A Design-wins; TSMC Used “Selectively” in the Future

It is worth noting that Intel highlighted the positive progress on its advanced nodes. The report, citing CEO Pat Gelsinger during a post-earnings call, notes that the high-volume production of Intel’s 18A node is scheduled to begin in the latter half of 2025, with most production dedicated to Intel’s own products. The company suggests that there are several new external Intel 18A and advanced packaging design wins.

Gelsinger also highlighted the role of TSMC as its foundry partner, adding that over the coming years, foundry revenue will largely stem from Intel’s products, with contract manufacturer TSMC being used “selectively” in the future, according to the report.

Restructuring Charges Weighs on Q3 Earnings

In the third quarter, Intel reported a loss of USD 0.46 per share on revenue of USD 13.3 billion. This represents a significant decline from the previous year, when the company posted earnings of USD 0.41 per share and revenue of USD 14.1 billion in the same quarter.

Restructuring charges meaningfully impacted Q3 profitability as the company took important steps toward its cost reduction goal, said David Zinsner, Intel CFO.

According to CNBC, in line with its cost-cutting strategy, Intel incurred USD 2.8 billion in restructuring charges this quarter, alongside USD 15.9 billion in impairment costs, partly due to accelerated depreciation of Intel 7 process node manufacturing assets and goodwill impairment within its Mobileye division. As a result, its adjusted gross margin dropped to 18%, compared with 38.7% of the previous quarter.

The report by CNBC reveals that on October 28^th, Intel disclosed in a filing that its board’s audit and finance committee approved measures to cut costs and capital expenses, including reducing its workforce by 16,500 and downsizing its real estate footprint. These job cuts, initially announced in August, are expected to be fully implemented by the fourth quarter of 2025.

Data Center Remains the Sole Growth Driver in Q3

Revenue from Intel’s Client Computing Group, which encompasses its PC chips for desktops and laptops, declined by 7% year-over-year to USD 7.3 billion.

In the data center segment, which includes AI chips, Intel reported a 9% year-over-year increase in revenue to US 3.3 billion.

Meanwhile, revenue from Intel’s contract manufacturing (foundry) business dropped to USD 4.4 billion, marking an 8% year-over-year decline.

2025 CapEx: Between USD 12 billion and USD 14 billion

On the other hand, CFO David Zinsner shared with Reuters that Intel plans USD 12 billion to USD 14 billion in capital expenditures for 2025.

In the previous earnings call, Intel has announced an over 20% reduction on its capex in 2024, bringing gross capital expenditures in 2024 to between USD 25 billion and USD 27 billion, with net capital spending in 2024 expected to fall between USD 11 billion and USD 13 billion.

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(Photo credit: Intel)