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)

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)

Amid an operational crisis, Intel has abandoned its “5 Nodes in 4 Years” plan, shelving the Intel 20A process node to focus entirely on the more advanced Intel 18A. Now, there is finally good news regarding the 18A process.

During the recent Enterprise Tech Tour in Portland, Oregon, CEO Pat Gelsinger made the first public reveal of the Clearwater Forest Xeon server processor, produced using the Intel 18A node. This chip is a crucial element in determining whether Intel’s ambitious transformation plan will succeed, according to Tom’s Hardware.

The report highlights that Clearwater Forest is the first high-volume chip to be fabricated on the Intel 18A node—a process so pivotal that Gelsinger has effectively staked the entire company’s future on its success. Although the chip was showcased at the event, it won’t hit the market until next year.

Tom’s Hardware also notes that while Intel will manufacture a range of other processors on the 18A node, delivering the Clearwater Forest chips on schedule is critical to restoring confidence in Intel’s foundry business among potential customers. This node is key to Gelsinger’s larger turnaround strategy, representing the culmination of his bold yet desperate push to develop five nodes in four years to revive Intel’s fortunes.

At the same event, Intel also introduced its Granite Rapids Xeon chips for data centers, boasting core counts that finally match those of AMD’s EPYC processors—an achievement Intel has struggled to reach since EPYC’s debut in 2017.

(Photo credit: Intel)

One of the most critical moves of Intel’s next step, regarded by CEO Pat Gelsinger as “the most significant transformation in over four decades,” is turning its foundry business into an independent subsidiary. Citing remarks from foreign media and analysts, a report by Taiwanese media outlet Anue notes that this is a much-needed temporary measure aimed at gaining the trust of potential customers, who may hesitate to entrust their chip designs to a competitor’s foundry division.

Following last week’s board meeting, Intel announced on September 16^th that the company will transform its foundry business into a wholly-owned subsidiary with its own board of directors.

It is worth noting that in the meantime, Intel signed a multi-billion-dollar, multi-year agreement with Amazon to produce certain chips for Amazon Web Services’ (AWS) AI data centers.

The Two tech giants will co-develop AWS’ next-gen AI fabric chips on Intel 18A, which signals a good start for Intel. Additionally, Intel is developing customized Xeon 6 server chips for AWS.

Regarding Intel’s plan on carving out its foundry business, citing comments from foreign analysts, the report by Anue states that the move could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

Here is why: if the new company appears as an independent entity and if it has the right board members, the foundry business could progress more smoothly, the report suggests. This move should help alleviate concerns from potential customers, but its effectiveness will yet be proven through execution.

The report added that if Intel’s collaboration with Amazon goes well, it could potentially manufacture other Amazon chips in the future, such as AWS Graviton processors and Trainium AI training chips used for machine learning.

Intel has failed to attract a significant number of clients for its foundry business, with Microsoft being its largest customer to date, the report notes.

Two years ago, the struggling giant lost the contract to design and manufacture chips for Sony’s next-generation PlayStation 6, dealing a major blow to its efforts to establish its nascent foundry business.

In its own words, the move in terms of the new subsidiary structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

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(Photo credit: Intel)

According to Reuters citing sources, Intel, facing a critical survival crisis, has temporarily halted its new chip packaging and testing project in Penang.

Malaysian media outlet The Star, citing informed sources, reported that Intel will temporarily halt its new chip packaging and testing project in Penang as part of cost-cutting efforts. However, the operations of existing facilities will remain unaffected.

The U.S. chip giant had announced three years ago that it would invest approximately USD 7 billion to build new chip packaging and testing facilities in Malaysia, looking to make it its largest overseas packaging and testing base.

Facing what is described as the most challenging period in its 56-year history, Intel is making drastic survival moves, including suspending dividend payments and laying off 15% of its global workforce to significantly reduce expenses.

Per The Star, Intel employs around 14,000 people in Malaysia, meaning over 2,000 local employees may face the risk of job loss.

Three weeks ago, Penang Chief Minister Chow Kon Yeow stated that Intel would continue its expansion plans in Penang, though he admitted that Intel’s USD 10 billion cost-cutting initiative would inevitably impact its operations in the region.

The Star cited sources, pointing out that Intel has been reassessing its investment projects in Malaysia. While construction at its new facility in Penang is still ongoing, the number of workers has been reduced.

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(Photo credit: Intel)