Intel has been in a gloomy mood for several quarters now. Results and reorganization announcements have always sounded like gloomy news. Against this backdrop, most Wall Street pundits were taken aback when Intel announced that it had made a $1.5 billion profit for its second quarter ended July 1. Last quarter, the company posted a loss of $2.76 billion, the worst performance in its history. Surprising results, but in reality they were achieved at the price of a horse’s medicine administered by Pat Gelsinger. For in the same quarter, sales continued to fall. With sales of $12.9 billion, the company nevertheless outperformed observers’ expectations in a gloomy global context.
Intel Unexpected profits in the second quarter
Intel is benefiting first and foremost from its drastic cost-cutting program. Savings are expected to reach $3 billion by 2023. These savings are synonymous with layoffs and business closures. The company hopes to achieve annual savings of $10 billion by 2025. But there are also signs of a brightening economy. The PC market, which is still digesting the covid period, seems to be stabilizing. The downturn is less marked in the second quarter. Intel even thinks it can do better in Q3.
Pat Gelsinger believes in the theory of industry cycles
These rather positive indicators allow the blue-chip executive to buy himself a little peace and quiet, and to continue deploying his strategy to become the #1 chip manufacturer once again. Although the overall semiconductor business is experiencing a violent slump, all industry players are expecting demand for chips to double by 2030. The race for capacity and innovation is therefore Intel’s main concern. Father Pat looks favorably on subsidies granted by the US and Europe to help build factories. Intel’s foundry business is beginning to attract significant customers such as MediaTek. With sales of 232 million, compared with 57 million a year earlier, these initial signals seem to support the company’s strategy for the time being.