Intel Corp.’s earnings declined last quarter as the company ramped up spending on new facilities and products, part of Chief Executive Officer Pat Gelsinger’s efforts to reignite the semiconductor giant’s success.
The chip company posted revenue of $20.5 billion in the fourth quarter, up 3% from the year-ago period. The company generated net income of $4.6 billion, down 21% year over year. Wall Street expected revenue of $19.2 billion and net income of $3.2 billion.
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Intel expects sales of around 18.3 billion US dollars for the current quarter. Analysts polled by FactSet put the figure at around $18.1 billion.
The US semiconductor giant is in a transition period, having fallen behind its peers in chipmaking, and rivals have been taking market share from it in some semiconductor categories. Mr Gelsinger, who took over as CEO in February 2021, has sought to reverse the decline, saying in December his turnaround plans could take more than five years.
The quarterly results come amid an ongoing global chip shortage caused by booming demand for electronic goods and services during the pandemic and tangled supply lines. The chip drought has led to widespread disruption, including automakers short of chips being forced to shut down plants and the prices of some electronic products being pushed up.
Mr Gelsinger said Wednesday the chip shortage is beginning to ease in some areas but still has the potential to last into 2024.
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“It’s still a challenge,” he said. “You’re just going to see incremental improvements from quarter to quarter.”
Intel shares fell more than 1% in after-hours trading. The stock closed Wednesday’s regular trading session around 1% higher at $51.69 after receiving a stay from a $1.2 billion fine imposed by the European Union’s antitrust regulators more than a decade ago.
Intel has expanded its chip manufacturing capacity at home and abroad over the past year. Most recently, the company announced a $20 billion investment in new chip fabs in Ohio and said the semiconductor industry is expected to double from $500 billion in annual sales to $1 trillion by the end of the decade.
“We just have a lot of catching up to do in building the capital footprint,” Mr. Gelsinger said at an analysts’ meeting on Wednesday.
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Intel planned major chip manufacturing investments in Arizona and New Mexico in 2021 and a roughly $95 billion commitment in Europe.
The company scored its legal victory in Europe on Wednesday, when the EU’s General Court in Luxembourg overturned much of a 2009 finding that Intel had abused its dominant position by granting loyalty rebates and payments that bought rival chipmaker Advanced Micro Devices Inc. from competing. The court said the analysis conducted by the European Commission, the bloc’s main antitrust authority, was incomplete.
The ruling comes as a blow to the European Commission, which is trying to expand its reach through new rules and a reinterpretation of its existing powers.
Intel welcomed the result. The EU could appeal against the result and announced that it would review the verdict.
Mr Gelsinger said business in China rebounded in the fourth quarter after suffering a setback in the previous quarter due to the country’s crackdown on the time children spend playing video games. The crackdown had previously impacted Intel’s server chip sales.
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He declined to give a timeline for the IPO of his self-driving car division, which is set to take place later this year. The unit, called Mobileye, generated record full-year revenue.
Kim Mackrael and Daniel Michaels contributed to this article.
Write to Meghan Bobrowsky at [email protected]