A bad day for Intel as rating lowered … but a great day for AMD

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after a announcement He Intel Corp. The dire economic downturn will result in the executive team cutting their salaries by up to 25 percent and staff salaries by five percent, the depressing news continued yesterday S&P Global Ratings The company’s rating was downgraded to A from A+.

A statement from the ratings company about the move said the Santa Clara, California-based semiconductor maker reported fourth-quarter earnings last week, citing “continued weak PC demand, inventory improvements in the client and server end markets, and our expectations.” much less than.” Company-specific performance issues.

“We expect weaker operating results in our client computing, data center and AI, and network and edge business segments in 2023, resulting in US$7 billion to US$8 billion of negative free operating cash flow (FOCF) before dividends.” It happens.”

The company said it took the rating action for several reasons, including:

  • Steady loss of market share to competitor Advanced Micro Devices (amd), especially in the server end market, which may last till 2024.
  • There is an expectation that the company’s revenue will decline by one percent in the mid-teens this year to an estimated US$53 billion.

“The company recently launched its fourth-generation Intel Xeon processor, Sapphire Rapids, in January 2023, which was originally scheduled for fall 2021,” S&P said. “Product launch delays have allowed AMD to gain significant market share over the past two years, threatening Intel’s long-established dominant market position in the x86 client and server CPU markets.”

In contrast to Intel’s woes, Bloomberg Reported Yesterday AMD gave a “better than feared” sales forecast for the first quarter as gains in the lucrative server market help make up for declining demand for PC chips.

Revenue in the period will be as high as US$5.6 billion, in line with the average analyst forecast of US$5.56 billion, AMD said in a statement on Tuesday — with estimates as low as US$5 billion.

one in releaseThe company said that for the full year 2022, it reported revenue of US$23.6 billion, gross margin of 45 per cent, operating income of US$1.3 billion, net income of US$1.3 billion and earnings per share of US$0.84 .

“2022 was a strong year for AMD as we delivered best-in-class growth and record revenue despite a weak PC environment in the second half of the year,” said Dr. Lisa Su, President and CEO of AMD.

“We accelerated our data center growth and closed our strategic acquisition of Xilinx, which significantly diversified our business and strengthened our financial model. While the demand environment remains mixed, we are confident in our ability to capture market share in 2023 and deliver long-term growth based on our differentiated product portfolio.

Meanwhile, S&P said it continues to view Intel’s product roadmap as “aggressive given its track record of technology missteps.” Intel is committed to delivering five process nodes in four years, achieving process performance parity in 2024, and reclaiming its leadership position.

“Intel’s massive capital expenditures, which are estimated to be US$15 billion to US$17 billion in 2023 and US$19 billion to US$20 billion in 2024, net of government support and various subsidies, will hamper its profitability over the next several years. But it will be heavy. years.”

David T. Sui, an analyst at S&P, said the company’s strategy for new nodes is “very important to them. But if there is any delay in the node transition, their products will be less competitive than those of their competitors, especially AMD.

“There is an investment required for them to move forward with that aggressive node transition curve. And it’s our expectation that free cash flow is going to be negative in 2023 and 2024.

He added that the company is taking actions including a announced pledged to cut costs by more than US$10 billion annually by 2025, but said “it’s not just about cutting costs – it’s about cutting costs for the whole company, fixed costs, capex and hopefully to some extent R&D.” It’s about seeing what is appropriate, optimizing, and making sure they (nodes) have enough money to execute their strategy.

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