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Intel remains profitable for its FY23

The financial results for Intel’s third quarter of fiscal 2023 have been released. After generating $15.3 billion in revenue, a 20% year-over-year decline, Intel is now profitable again. However, due to macroeconomic instability and ongoing difficulties in its client and data centre business segments, the company was forced to cut its guidance for the fourth quarter.

Even though Intel’s Q3 FY2023 sales were $15.3 billion, down 20% from the same quarter a year prior, it was still within the range of the company’s guidance, which was given back in July. Additionally, Intel’s gross margin decreased to 45.9%, which is still well behind the company’s historical performance or long-term objectives even though it is higher when compared to the gross margin in Q2. The business’s net income fell by 85% year over year to $1 billion.

In Q3 2022, Intel’s Client Computing Business earned $8.1 billion, a 17% decrease from the same quarter the previous year. Operating income for the group came to $1.7 billion, a decrease from Q3 2021’s operating income of $3.6 billion. Client system sales of Intel’s processors and chipsets decreased as a result of weaker PC demand from consumers, small businesses, the education industry, and OEM inventory reductions. Intel emphasized that even while PC makers’ inventory levels somewhat decreased during the quarter, they are still high enough to have a long-term impact on the company’s shipments of CPUs and chipsets.

Earnings for Intel’s Accelerated Computing Systems and Graphics Group (AXG) increased from $171 million in the same quarter last year to $185 million this quarter. It took place as a result of a “custom computing product ramp,” not because the business began to deploy its eagerly anticipated discrete graphics processors for desktops, laptops, and servers. Although Intel does not identify the product, we could assume that it is their cryptocurrency mining processor. Although Intel did not declare the volume shipments of the Ponte Vecchio compute GPU, which is currently in production, it is most likely that a cryptocurrency mining chip was what drove AXG’s performance.

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Revenue for Intel’s Datacenter and AI Group (DCAI) was $4.2 billion (down 27% YoY), with no operating profit. Lower server volumes and customer inventory reductions are to blame for Intel’s appalling performance, but AMD’s increasing rivalry and the delayed Sapphire Rapids ramp-up also had a big impact on DCAI’s numbers.

The only business division of Intel that saw a rise in annual revenue was the Network and Edge Group. NEX’s revenue for the third quarter of 2021 was $2.3 billion, an increase of 14% over the same period the previous year. However, its operating profit fell by $511 million to $75 million. According to Intel, a decline in demand for its networking-focused Xeon CPUs offset rises in demand for 5G, Edge, and Ethernet devices.

Sales for Intel’s Mobileye division, which just this week went public, increased by 38% to $450 million, and profitability increased by 12% year over year to $142 million. When compared to Q3 2021, Intel’s Foundry Services saw sales of $171 million which were essentially constant, while losses widened to $103 million as the business expanded its investment in new fabs and tools.

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Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.
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