Chip giant Intel (INTC) is set to report its second-quarter earnings after the bell on Thursday, as the company continues its massive turnaround and amid reports that it plans to lay off thousands of workers.
Intel is trying to regain market share lost to rival AMD (AMD) as it works to build out its AI chip and third-party foundry businesses. All this comes as the PC market is in the early stages of a recovery, following eight consecutive quarters of declines due to the explosive growth the industry experienced at the onset of the COVID-19 pandemic.
Intel is expected to report earnings per share (EPS) of $0.10 and revenue of $12.9 billion. The company saw earnings per share of $0.13 on revenue of $12.9 billion in the same quarter last year, according to analyst estimates compiled by Bloomberg.
According to Bloomberg, the chipmaker is also expected to lay off thousands of employees in the coming days. The company is spending billions of dollars on factories and other facilities around the world as it looks to regain its share of the chip manufacturing industry, which is dominated by Taiwan Semiconductor (TSMC).
Intel’s data center and AI segment is expected to bring in $3 billion this quarter, down 2.6% from the same period a year ago, when it earned $3.1 billion. The data center and AI businesses provide an opportunity for Intel to grow its revenue thanks to the huge demand for CPUs and GPUs to power AI applications. But Intel’s GPUs aren’t as sought after as Nvidia’s (NVDA), which are seen as the best chips for AI processing.
Shares of Intel are down 38% year to date versus AMD, which is down just 3.7%. Nvidia shares are up 127%.
While data centers and AI get the most attention, Intel’s Client segment, which includes sales of chips for enterprise and consumer computers, is still its largest business unit.
For the quarter, Intel is expected to report customer revenue of $7.5 billion, an improvement of 6.1% from the same quarter last year, when the company saw customer revenue of $6.7 billion.
However, Intel is facing a potentially existential threat in the PC space from an unlikely source: Qualcomm (QCOM). The company, better known for developing chips for smartphones and tablets, released its new Snapdragon X Elite PC chip in May as part of Microsoft’s new Surface Laptop and Surface Pro.
The chip offers better power and battery life than competing Intel and AMD chips, making it a quality rival to Apple’s own M-series chips. But Intel is expected to launch its answer to the Qualcomm processor later this fall.
Then there’s Intel’s Foundry business. The company is opening its foundries to outside chip designers in hopes of creating a business that can rival TSMC’s own foundry. But so far, Intel is its own biggest customer. And while there are customers lining up, including Microsoft, it will take some time for the company to gain traction in the market.
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