Intel Unveils New Financial Strategy for Future Growth
On April 2nd, Intel officially announced a new financial reporting structure, consistent with its previously declared objectives aimed at guiding its contract manufacturing operations towards a prosperous future beyond 2024. This revamped framework is designed to bolster transparency, accountability, and incentivization across all operational segments, thereby fostering cost efficiency and augmenting returns.
To buttress this novel architecture, Intel not only furnished financial performance data for its restructured operational divisions for the years 2023, 2022, and 2021 but also elucidated the strategic pathway for Intel Foundry Services to achieve sustained growth and profitability. Moreover, it outlined explicit objectives for enhancing performance and generating shareholder value. The operational blueprint establishes a symbiotic relationship between Intel Foundry Services (the company’s manufacturing sector) and Intel Products (constituted by the company’s product operations), with the former offering a comprehensive optimization spanning factory networks to software solutions.
Commencing with the first quarter of 2024, the company will report the performance of its various divisions as follows: Client Computing Group (CCG), Data Center and Artificial Intelligence (DCAI), Network and Edge (NEX), Intel Foundry Services, Altera (previously known as Intel’s Programmable Solutions Group), Mobileye, and others. Collectively, CCG, DCAI, and NEX are referred to as “Intel Products,” while Altera, Mobileye, and the remainder are categorized as “All Others.” Notably, Altera, formerly reported under DCAI, has now been segregated as an independent business entity specializing in FPGA.
Intel Foundry Services encompasses foundry technology development, manufacturing, supply chain management, and the erstwhile foundry services (IFS), accounting for revenues from both external foundry clients and Intel Products, as well as the costs previously allocated to Intel Products for technology development and product manufacturing.
Intel asserts that this strategic modality is intended to significantly reduce costs, enhance operational efficiency, and elevate asset value. The operational losses of Intel Foundry Services are anticipated to peak in 2024, with aspirations to achieve a balanced operational profit margin by the end of 2030, targeting a non-GAAP gross margin of 40% and a non-GAAP operating margin of 30%. Meanwhile, the Intel Products division aims to attain a non-GAAP gross margin of 60% and a non-GAAP operating margin of 40% by the end of 2030.
