Intel has defied market expectations and posted an optimistic outlook for Q4 2024, predicting revenues of $13.3bn and $14.3bn. This growth, said the US chip manufacturer, would be driven mostly by earnings increases in its personal computer (PC) and server operations. Intel additionally predicted that current-quarter revenue would exceed estimates, though it warned investors that it had a “lot of work to do” before it caught back up with other rivals like TSMC and Nvidia. The news sparked a rally in the firm’s shares, which rose by over 7% in after-hours trading before retreating after its results for the third quarter of 2024 (Q3 2024) were eventually published.
“Our Q3 results underscore the solid progress we are making against the plan we outlined last quarter to reduce costs, simplify our portfolio and improve organizational efficiency,” said Intel’s CEO, Pat Gelsinger. “We delivered revenue above the midpoint of our guidance and are acting with urgency to position the business for sustainable value creation moving forward.”
Intel’s Q3 results hit by net loss
Intel’s Q3 2024 revenue exceeded analysts’ expectations, although it recorded a significant net loss due to impairment and restructuring charges. The reported net loss for the third quarter was $16.6bn, excluding losses related to non-controlling interests. This result contrasts with a net profit of approximately $300m in the same quarter of the previous year.
Still a major CPU supplier, Intel gained from renewed demand for PCs, spurred by the rollout of AI functions on devices and an updated Windows operating system cycle. Revenue from Intel’s client computing group (CCG), which includes PC chips for desktops and laptops, fell by 7% to $7.3bn, slightly below the $7.38bn anticipated by analysts.
Meanwhile, revenue from Intel’s contract manufacturing segment, known as its foundry business, declined 8% to $4.4bn. On the other hand, the company’s revenue from its data centre and AI (DCAI) unit and network and edge (NEX) unit rose 9% and 4% respectively compared to Q3 2023 revenues.
Market analysts expect demand for Intel’s conventional server chips, part of its data centre segment, to improve in the second half of 2024 after quarters of weak demand as resources were focused on AI chips. Intel continues to face competition from AMD, which now has a market valuation larger than Intel’s and is Nvidia’s main competitor in AI graphics processors.
In a subsequent conference call with market analysts, Intel’s CEO Pat Gelsinger confirmed that high-volume production of its 18A node is planned for the second half of 2025, and that most products using it would be produced by Intel. Foundry revenue too, Gelsinger noted, would primarily derive from Intel’s own products, alluding to only “selective” use of outsourcing chipmaker TSMC in future.
Last month, Intel began extensive layoffs as part of its ongoing restructuring process, impacting over 2,000 employees across major sites in the US states of Oregon, Arizona, and California. The chipmaker formally notified these states, as required under the Worker Adjustment and Retraining Notification (WARN) Act. This move will affect 1,300 employees in Oregon, 385 in Arizona, and 319 in California.
Read more: Intel to reduce costs and refocus chip business in strategic overhaul
