Once one of the largest semiconductor companies, Intel is facing fierce competition but also declining demand for its products. Therefore, Q4 revenue was $14.0 billion, down 32 percent year-over-year (YoY) while full-year revenue was $63.1 billion, down 20 percent YoY.

The company reported a net loss of $664M in the fourth quarter compared to a profit of $4.62B in the same quarter 2021. Full year net income came at $8B down 60% year-over-year.

Fourth-quarter earnings (loss) per share (EPS) was $(0.16) and Full-year EPS was $1.94 (-60%). Q4 revenue came in at the low end of guide and was impacted by persistent macro headwinds, which began in Q2 and underscored a 2022 characterized by unprecedented volatility, which will continue in the near-term.

Financial Highlights

• Fourth-quarter revenue was $14 billion, landing at the low end of the range and down 8% sequentially impacted by softening demand for PCs. Gross margin for the quarter was 44%, slightly better than expectations.

• EPS (earnings per share) for the quarter was 10 cents, 10 cents below company’s guide on lower revenue and increased inventory reserves. Operating cash flow for the quarter was $7.7 billion. Net CapEx (capital expenditures) was $4.6 billion, resulting in an adjusted free cash flow of $3.1 billion. Intel paid dividends of $1.5 billion.

• FY2022 (fiscal year 2022) revenue was $63.1 billion, gross margin of 47.3% and EPS of $1.84. Cash generated from operations was $15.4 billion and an adjusted free cash flow of approximately negative $4 billion, at the low end of the range provided last quarter, despite approximately $3 billion of capital incentives that shifted from Q4 into 2023.

Business Highlights

▪ Intel 7 is now in high-volume manufacturing for both client and server. Intel 4 is manufacturing-ready, with the Meteor Lake ramp expected in the second half of 2023. Intel 3 continues to progress and is on track. On Intel 20A and Intel 18A, Intel’s first internal test chips, and those of a major potential foundry customer, have taped out with products undergoing fabrication.

▪ In the fourth quarter of 2022, 13th Gen Intel Core desktop processor family became available, starting with desktop “K” processors and the Intel® Z790 chipset. Additionally, in December 2022, in partnership with ASUS, Intel officially set a new world record for overclocking, pushing the 13th Gen Intel Core i9-13900K past the 9 gigahertz barrier for the first time ever.

▪ In January 2023, DCAI launched its 4th Gen Intel Xeon Scalable processors (formerly code-named Sapphire Rapids) with the support of customers and partners such as Dell Technologies, Google Cloud, Hewlett Packard Enterprise, Lenovo, Microsoft Azure, NVIDIA and many others, and is ramping production to meet a strong backlog of demand.

▪ IFS achieved record revenue for both the fourth quarter and full year, with active design engagements with seven of the 10 largest foundry customers. It also added a leading cloud, edge and data center solutions provider as a customer to Intel 3.

▪ Intel completed the IPO of Mobileye, which achieved record revenue for both the fourth quarter and full year of 2022. Mobileye continued to execute well in its core advanced driver-assistance systems (ADAS) business, as it launched systems into 233 distinct vehicle models in 2022.

Guidance

For Q1 2023, Intel expects first quarter revenue of $10.5 billion to $11.5 billion and sees potential for market conditions to improve faster than typical seasonality as third-party data shows macro headwinds easing in the second half of the year.

″While we are progressing toward a $3 billion spending reduction with significant austerity across the company given the fixed cost nature of our business, we expect the sequential revenue decline will result in negative operating margin in the first quarter. We are forecasting gross margin of 39%, a tax rate of 13% and EPS of negative $0.15 at the midpoint of revenue guidance, inclusive of $350million to $500 million of operating margin,″ said Pat Gelsinger, Intel chief executive officer.

In the fourth quarter, the company generated $7.7 billion in cash from operations and paid dividends of $1.5 billion. For the full year, the company generated $15.4 billion in cash from operations and paid dividends of $6.0 billion.