Intel reports a surprise slump in revenue and slashes outlook

Intel shocked Wall Street with a surprise slump in revenue in its latest quarter and slashed its financial outlook for rest of the year, sending its battered stock price down 10 per cent in after-market trading on Thursday.

The biggest US chipmaker by revenue blamed the disappointment on weakening economic conditions, supply chain disruptions and competitive pressures. The news followed generally robust earnings reports from other big chip companies in recent days, and suggested that Intel had been hurt by its big exposure to the shrinking PC market and its loss of leadership in leading-edge chipmaking to TSMC.

In a statement, chief executive Pat Gelsinger said the latest results were “below the standards we have set for the company and our shareholders. We must and will do better.” He added that a “sudden and rapid decline in economic activity was the largest driver” behind the slump, but that it also reflected “execution issues” at the company.

Pro forma revenue for the second quarter of the year tumbled by 17 per cent from a year before, to $15.3bn, while earnings per share fell 79 per cent, to 29 cents. Analysts had been expecting revenue of $17.9bn and earnings per share of 69 cents.

The news came as the House of Representative passed the long-awaited Chips Act, which will give $52bn in subsidies to chipmakers to carry out more of their manufacturing in the US. Intel, which stands to receive up to $6bn for a new plant in Ohio, is expected to be one of the biggest beneficiaries of US taxpayer support.

For the current quarter, the chipmaker said it expected revenue of $15bn-$16bn, well below the $18.6bn analysts had pencilled in. Earnings are expected to reach 35 cents a share, compared to a Wall Street forecast of 87 cents.