Tumbled 177.5 billion overnight! Intel is in deep crisis, but the CEO is still playing financial operations

   Original title: A plunge of 177.5 billion overnight! Intel is in deep crisis, but the CEO is still playing financial operations

   “AMD YES!” was originally a joking slogan for venting dissatisfaction with Intel’s toothpaste squeezing behavior. Become a reality.

   After the US stock market the day before yesterday, Intel announced the performance report for the third quarter of fiscal year 2020. The financial report shows that Intel’s revenue for the quarter was US$18.33 billion, down 4% year-on-year, and its net profit was US$4.28 billion, down 28.6% year-on-year. This report is obviously unable to satisfy the market. Yesterday, Intel closed down 10.58%, and its market value lost $26.56 billion.

   In July of this year, Intel announced that the production of 7nm chips would be delayed, causing the stock price to plummet by 16.24% and the market value to evaporate by USD 41.5 billion. This year, Intel’s stock price has fallen by 20%.

   Some comments believe that Intel’s malaise this year is actually paying for the wrong decisions made in the past three decades. While other giants in the United States are shutting down or selling parts production and outsourcing low-margin, low-tech businesses, Intel still insists on “grabbing.” This strategy has led to the decentralization of Intel’s main business resources, and its advantages have been eroded little by little.

   Now, this chip giant is in the deepest crisis in a decade, and its market value is only two-thirds of its old rival AMD.

  Weak core business

  The data center business that sells server chips is the main source of Intel’s profit Source, its main customers are companies and governments. In the quarter, revenue from data centers fell by 7%, the annualized rate fell by 4%, and revenue from government and corporate customers plummeted by 47%.

   Bank of America announced that it downgraded Intel’s stock rating to “weaker than the broader market”, while Goldman Sachs insisted on a “sell” rating because “based on the company’s “Continuing concerns about long-term competitive position in profit margins”, Goldman Sachs also gave a forecast stock price of $46, which means that analysts believe that Intel will fall by 15%.

   What’s more deadly than the decline in revenue is the plunge in profit margins. Intel’s Chief Financial Officer George Davis said: “Market demand is shifting from desktop computers and high-end enterprise computers to entry-level consumer and educational computers. Although sales are good, average selling prices are falling, so this will have a slight impact on gross margins. “Revenues from cloud computing customers and network operators have helped to make up for some shortcomings, but these chips are relatively low in price and cannot have a substantial impact.

  i9 series sales fell short of expectations

   Loop Capital Markets analyst Cody said that he would not accept Intel’s data The declining performance of the center is attributed to the epidemic. He believes that the demand for personal computers in the market has increased in the past few months, which shows that the impact of the epidemic on market demand is not so great.

   The facts are the same. FactSet’s data shows that due to employees and students working and studying from home, Intel’s personal computer division’s sales were $9.8 billion, more than analysts The forecast is 9.09 billion US dollars.

   Since it has not outsourced its chip business, Intel’s product prices have always been higher than its competitors. The past technological advantages and quality advantages can guarantee Intel’s market share. But this year, AMD has the highest market share since 2003 by virtue of its technological capabilities to catch up and the low prices obtained by outsourcing.

   At the end of 2018, the global chip market transitioned from 14nm to 10nm. Due to making way for 10nm production, Intel’s 14nm chip inventory problems. At that time, because AMD outsourced chip production to TSMC, the inventory was relatively sufficient, so Intel took advantage of Intel’s mistakes and grabbed a large market in one fell swoop.

  AMD YES becomes reality?

  ’s share price shock also shaken Intel. Intel CEO Bob Swan said that Intel will decide whether to deliver the next 7-nanometer chips in January next year. OEM for third-party factories. Analysts speculate that it will be outsourced to TSMC, which happens to be Intel’s biggest competitor in the field of chip manufacturing.

   The “diving” of Intel’s stock price has shrunk the wealth of its founder and creator of Moore’s Law, Gordon Moore, by nearly $1 billion. The 91-year-old technology entrepreneur ranks 48th on the global rich list and still holds 4% of Intel’s shares. Fifty-five years ago, Gordon Moore predicted that computer processing power would double every year. This insight came to be known as “Moore’s Law.”

   design and manufacture double crashes

   leaks in the house even rain overnight, not only “cash cow “The business volume of the data center has problems, and the future growth engine cloud computing processor has also slowed down. In the conference call, Davis said that sales to cloud service operators only increased by 15% in the third quarter, while the increase in the second quarter was 47%. As customers enter the “digestion period”, cloud computing-related sales It is expected to slow down further in the fourth quarter.

   In the conference call after the earnings report, CEO Swann reconfirmed that the 7nm process chips will be delayed. He said that self-produced 7-nanometer chips will not be unveiled until the second half of 2022 to early 2023.

   In contrast, Intel’s data center competitors AMD and Nvidia are expected to achieve annual revenue growth of 32% and 44%, respectively. A year ago, Intel was the most valuable semiconductor company in the world, with a market value of approximately $220 billion. And now, Intel’s market value is still 220 billion US dollars, but the current market value of Nvidia and TSMC are 334 billion US dollars and 420 billion US dollars.

   In terms of GPU share, Lao Huang and AMD have already squeezed Intel to the limit

  Analysis Company Baron said that Intel is now in the greatest crisis. Although from the data point of view, Intel’s revenue has not yet reached the point of “incurable”, but “being behind” will cause a company to collapse very quickly. Intel not only lags behind in the new generation of chips, but also cannot convince investors that they can solve this problem.

   In the past, Intel was one of the few big companies that could design and manufacture chips.

   But a year ago, Intel failed to provide Apple with 5G baseband on time, which caused Apple to switch to Qualcomm. Subsequently, Intel announced its withdrawal from the 5G smartphone modem business.

   In June of this year, Apple officially announced that its Mac computers will abandon Intel chips in the future and switch to its own ARM-based chips like the iPhone and iPad, “Apple Silicon “. Since 2005, Apple has been using CPU processors based on Intel’s x86 architecture. This time the announcement of abandonment means that Apple’s 15-year cooperation with Intel has officially ended.

  ”Super cooperation” becomes a thing of the past

   On the surface, the impact of losing Apple’s 3 billion orders on Intel Not big. But the frightening thing is that the mainstream opinion in Silicon Valley believes that Intel’s “toothpaste”-like chip upgrade speed can no longer meet Apple’s demands and drags down Apple’s product strategy.

   Subsequently, Amazon launched a self-developed server chip based on the ARM architecture. Nvidia announced that its latest artificial intelligence computer will use a server processor from AMD. This is the first time Nvidia’s artificial intelligence system has not selected an Intel processor.

  As more and more companies choose to design their own chips based on ARM, Intel will lose one Apple after another.

   manufacturing, not to mention. Its own 7nm is still on the way to production. TSMC’s 5nm process chips have reached consumers with the iPhone 12 and Huawei Mate 40 series, and 4nm chips have also been put on the research and development agenda. When Intel’s 7nm goes online in 2023, I am afraid that it will face the dimensionality reduction of TSMC’s 4nm chip.

   Old rival AMD has also taken the lead in Intel’s “smaller and more energy-efficient” chip competition by outsourcing TSMC.

  If the situation does not improve, just as the law proposed by the founder Moore continues to fail, Intel’s name will become more and more on the list of “leading semiconductor companies” light.

  CEO is still playing repurchase

  As the crisis approaches, Intel also starts” Cut meat to save yourself”, focusing on the main business.

   On October 20, South Korea’s SK Hynix Corporation announced the acquisition of Intel’s NAND flash memory and memory business for US$9 billion. The sale includes Intel’s NAND component and wafer business, NAND solid state drive business, and a NAND chip manufacturing plant in Dalian. Following the baseband chip business and the connection chip business, Intel cuts meat again.

   This acquisition is all carried out in cash and does not involve any equity transaction. This also means that Intel completely abandoned this part of the business.

In the storage business of   , Shizhi has no pricing power, and you can exchange it for money if you discard it.

  Before the acquisition, Intel ranked fifth in the global NAND market with an 11% market share in the second quarter of 2020. But in this market, Intel has no pricing power and it is difficult to generate sufficient profits.

   Some people in the industry said, “Intel’s CPUs have been delayed in this generation. They have to get rid of some non-core businesses and go lightly. They need to concentrate more resources on the CPU. “

   Although Intel said it plans to use the funds obtained from this transaction to develop industry-leading products and strengthen key businesses with long-term growth potential, including artificial intelligence, 5G network and edge devices related to autonomous driving. But from a practical point of view, Intel may not have done so.

   In October last year, Intel launched a $20 billion repurchase program, repurchasing $7.6 billion in stocks. In August of this year, the acquisition plan accelerated again. Throughout 2020, Intel’s planned capital expenditure is only 15 billion U.S. dollars, even lower than the 16.2 billion U.S. dollars in 2019. There is no sign of increasing investment in research and development.

  Although business layman, investment is a master

  Industry insiders said that CEO Swan only temporarily increased Intel’s Interested in earnings per share, not in solving its worst crisis in decades. The person speculated that Intel sold its NAND business to increase its free cash flow and will use most of its cash for larger-scale buybacks. The current CEO, Swann, is different from his predecessor Susha in that he is a complete layman in chip development.

   He emphasized that unless capital expenditures are substantially increased to solve its urgent R&D and production problems, Intel can only go further and further on the dead end.

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