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)

On October 30, local time, Siemens announced that the company had signed an agreement to acquire Altair Engineering, a leading software provider in the industrial simulation and analytics market. This move strengthens Siemens’ position as a leading technology company and its leadership in the industrial software field.

Siemens AG stated that the combination of Altair’s capabilities in simulation, high-performance computing, data science, and artificial intelligence with Siemens Xcelerator will create the world’s most comprehensive AI-driven design and simulation product portfolio.

This transaction is expected to increase Siemens’ digital business revenue by more than 8%, adding approximately 600 million EUR to the 7.3 billion EUR digital business revenue reported in Siemens’ fiscal year 2023.

The transaction is anticipated to close in the second half of 2025. Altair, an information technology company headquartered in Troy, Michigan, USA, was listed on the Nasdaq in 2017.

Altair primarily provides software and cloud solutions in the fields of simulation and analytics, data science, artificial intelligence (AI), and high-performance computing (HPC). Its main products include HyperWorks, a simulation platform for structural analysis, fluid dynamics, and multidisciplinary optimization; SolidThinking, an innovative solution for product design supporting industrial design and engineering analysis; and Altair Smart Learning, a tool for machine learning and AI.

Originally an engineering consulting firm, Altair gradually expanded into the EDA field, adopting an acquisition strategy similar to other major players in the EDA industry. In 2017, Altair acquired Runtime Design Automation, a company providing tools for CPU, GPU, and system-on-chip (SoC) design engineers who rely on EDA tools.

In 2022, Altair announced the acquisition of Concept Engineering, a supplier of automatic schematic generation tools and electronic circuit and harness visualization platforms. In August 2024, Altair announced the acquisition of all outstanding shares of Metrics Design Automation Inc. (Metrics), further expanding its influence in the EDA sector.

In addition to Siemens’acquisition of Altair, the well-known EDA company Cadence has made successive acquisitions of Invecas and BETA CAE Systems. Notably, another EDA giant, Synopsys, acquired Ansys for as much as 35 billion USD, setting a new record in the industry and attracting wide attention.

Meanwhile, in recent years, facing the global wave of mergers and acquisitions in the EDA industry, Chinese EDA companies have been catching up. Through mergers and acquisitions, they are accelerating their growth. According to incomplete statistics, several domestic companies, including Empyrean, Semitronix, X-EPIC, Primarius, Rigoron, and S2C, have implemented acquisition strategies to expand and enrich their technology product lines, enhancing their core competitiveness and market influence.

(Photo credit: Siemens)

Amid concerns on its HBM progress and yield issues on advanced nodes, Samsung has released its full Q3 2024 financial results, with the quarterly revenue reaching KRW 79.1 trillion won (approximately $57.35 billion), hitting an all-time high. However, its semiconductor business remains lackluster, as the DS Division recorded a quarterly operating profit of 3.86 trillion won, marking a 40% decline from the previous quarter.

According to a report by CNBC, while demand for memory chips driven by AI and traditional server products provided some support, Samsung noted that “inventory adjustments negatively impacted mobile demand.” The company also highlighted challenges with “the increasing supply of legacy products in China.”

Samsung continues to face challenges in its most advanced wafer foundry processes. According to TrendForce, the company has yet to solidify its reputation as a reliable partner for cutting-edge nodes, which may hinder its ability to secure orders from top IC design houses and potentially delay its efforts to expand capacity.

Losses in Foundry and System Chip Lead to Profit Drop in DS Division, while Memory Remains Strong

On October 31, Samsung Electronics reported Q3 consolidated revenue of KRW 79.1 trillion, an increase of 7% from the previous quarter, on the back of the launch effects of new smartphone models and increased sales of high-end memory products. According to Business Korea, the Q3 revenue exceeded its previous revenue record of KRW 77.78 trillion, set in Q1 2022.

However, operating profit declined to KRW 9.18 trillion, largely due to one-off costs, including the provision of incentives in the Device Solutions (DS) Division, according to its press release.

In terms of the DS Division, which encompasses the memory and foundry business, it posted KRW 29.27 trillion in consolidated revenue and KRW 3.86 trillion in operating profit in the third quarter, marking almost a 50% drop from the prior quarter’s KRW 6.45 trillion.

According the Korean Economic Daily, Samsung attributed the weaker profit to higher-than-anticipated one-time expenses totaling around KRW 1.5 trillion, which included employee performance bonuses, as well as escalating losses in its foundry and system chip divisions, each estimated at over KRW 1.5 trillion.

On the other hand, the company noted that its memory chip business performed better than anticipated, with an estimated profit of around KRW 7 trillion for the quarter, the Korean Economic Daily notes.

Memory business sales reached KRW 22.27 trillion, more than doubling from the previous year, driven by increased demand for high-end chips used in AI devices and servers, such as HBM, DDR5, and server SSDs, according to Samsung.

Key Takeaways for 2025 Outlook

In the fourth quarter, Samsung notes that while memory demand for mobile and PC may encounter softness, growth in AI will keep demand at robust levels.

As for the Foundry Business, Samsung claims that the unit successfully met its order targets — particularly in sub-5nm technologies — and released the 2nm GAA process design kit (PDK), enabling customers to proceed with their product designs. It notes that the Foundry Business will strive to acquire customers by improving the process maturity of its 2nm GAA technology.

Looking ahead to 2025, for DRAM, Samsung plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on. For NAND, it will proactively respond to the high-density trend based on QLC products — including 64TB and 128TB SSDs — and solidify leadership in the PCIe Gen5 market by accelerating the tech migration from V6 to V8.

The Foundry Business, on the other hand, aims to expand revenue through ongoing yield improvements in advanced technology while securing major customers through successful 2nm mass production. In addition, integrating advanced nodes and packaging solutions to further develop the HBM buffer die is expected to help acquire new customers in the AI and HPC sectors, according to Samsung.

(Photo credit: Samsung)

Ahead of Intel’s upcoming Q3 financial announcement on October 31st, the market has speculated that it may suffer another quarter of revenue decline, while the company might reportedly incur a loss over USD 3 billion this year.

However, the struggling giant might have made a significant misstep as early as three years ago, when Pat Gelsinger took over as Intel’s CEO, and soon damaged the relationship with TSMC by offending the foundry leader, according to an in-depth report by Reuters.

Sweet Deal Canceled upon Bold Remarks

According to the report, Intel used to enjoy a favorable arrangement with TSMC, as the latter was producing chips that Intel could not manufacture in-house. Citing several people familiar with the deal, TSMC was offering Intel substantial discounts.

However, rather than carefully fostering the relationship, Gelsinger made controversial statements, one after another, and strained ties with TSMC by highlighting Taiwan’s delicate situation with China, the report notes.

According to Reuters, TSMC decided to revoke Intel’s discount as a counterattack. Citing sources familiar with the situation, instead of offering approximately 40% off on the $23,000, 3nm wafers used to manufacture Intel’s chips, TSMC now asked Intel to pay the full price. The move significantly shrink Intel’s margins.

To recap, Reuters states that in May 2021, just months after Gelsinger took the throne of Intel’s CEO, he highlighted the ongoing US-China conflict and warned that the industry shouldn’t become too reliant on TSMC. “You don’t want all of your eggs in the basket of a Taiwan fab,” he said, implying that companies need to look for other supplier alternatives.

TSMC certainly does not like the comments. According to a previous report by Wccftech, TSMC founder Morris Chang responded by saying that he was taken aback by Gelsinger’s rudeness towards TSMC when they met back in 2015.

Later that December, Gelsinger further advocated for U.S. investment in domestic chipmakers, stating at a tech conference that Taiwan is not a stable place, according to Reuters.

When asked by Reuters about this previously undisclosed incident, Intel stated that TSMC remains an important partner and that they maintain a “healthy business relationship today.” TSMC also told Reuters that Intel is a valued customer.

Still Lagging behind as 18A Challenges Remain

TSMC founder Morris Chang used to say that Gelsinger’s previous remarks were made from an emotional standpoint, which failed to clarify how Intel intends to surpass TSMC technologically in the years ahead. Now, Intel’s push to reclaim its manufacturing edge through a new chip-production process, known as 18A, has encountered delays and technical hurdles, with some potential clients hesitating to adopt it.

According a previous report by Reuters, Broadcom’s initial tests with Intel’s 18A (1.8nm-class) process did not meet expectations, creating additional pressure on the semiconductor giant’s efforts to catch up with TSMC in the foundry sector.

The report noted that Broadcom tested Intel’s 18A by producing wafers with typical design patterns. However, its engineers and executives were said to be disappointed with the results, regarding the process as “not ready for high-volume production.”

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(Photo credit: Intel)

Taiwan’s semiconductor manufacturing is making strides in advanced process and packaging expansion. TSMC’s new 2nm fab in Kaohsiung will hold a tool-in ceremony this November, followed by equipment installations in December. Meanwhile, ASE’s Siliconware Precision Industries is set to expand advanced packaging capacity in the Erlin Science Park.

According to the Liberty Times, TSMC’s first 2nm fab in Kaohsiung’s Nanzih District is nearing completion. Industry sources indicate that TSMC has scheduled a low-profile tool-in ceremony with equipment suppliers on November 26, led by COO Y.P. Chyn, with equipment installations to begin on December 1. The Nanzih site is expected to serve as TSMC’s primary base for 2nm production.

The report also highlights the rapid progress at TSMC’s Nanzih facility. The P1 fab is nearing completion, with the office tower and P2 fab structure already in place, while groundbreaking for a third fab (P3) occurred this month. Industry insiders note that a fourth and fifth fab (P4 and P5) have received environmental approvals and could serve as wafer production sites for TSMC’s A16 process under the 2nm generation.

Key equipment suppliers, including Lam Research, ASML, and Tokyo Electron, have begun establishing presences in Kaohsiung to support this next-generation fab.

In related developments, ASE Technology announced on October 28 that its subsidiary Siliconware Precision Industries will invest NTD 419 million to secure land-use rights in the Erlin Science Park. According to a report from the Commercial Times, industry sources indicate this acquisition is primarily to expand CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging capacity.

TSMC CEO C.C. Wei noted earlier in its third quarter earnings call that CoWoS advanced packaging capacity remains constrained. TSMC has committed to doubling CoWoS capacity by year-end and will continue expanding in 2025 to better align supply with demand. However, due to ongoing capacity limitations, the Commercial Times reported that TSMC stated the capacity shortfall had led them to expand outsourcing to OASTs, seeking support from industry partners.

(Photo credit: TSMC)