Intel will make better use of existing facilities to save

Intel will make better use of existing facilities to save on building new facilities

The drop in demand in many key markets for Intel’s business has already caused production utilization rates to drop, according to company management, which will immediately drop its profit ratio by four percentage points to 39% in the current quarter. or 35%, depending on the calculation method. The company will not mindlessly create new companies, but will try to increase the efficiency of the use of existing ones.

    Image source: ASML

Image source: ASML

Intel CEO Patrick Gelsinger hurried Investors reassure: “I want to remind everyone that we are on a multi-year journey. We remain focused on things within our control, overcoming short-term difficulties while maintaining a long-term strategy. While I soberly understand that the road to our long-term financial goals will be a long one, I am pleased with the progress that has been made in the transformation ahead.”.

On numerous occasions, Gelsinger emphasized in his keynote speech that the company remains committed to mastering five new process technologies in four years, matching competitors in lithography by 2024, and surpassing them by 2025 when manufacturing products based on Intel -Base masters 18A technology. The company’s boss continues to insist that in this direction of development it is either moving according to the planned timetable or ahead of it.

When it came to the possibility of reviewing Intel’s capital expenditures, Patrick Gelsinger explained that management is looking at this part of the company’s budget “through two different lenses.” The first has a strategic evaluation criterion. From this point of view, it is important that Intel, as mentioned above, takes a leading position in lithography. “Could this save us tens and hundreds of millions of dollars? yes we will try But we will not cut investments in the areas needed to achieve long-term strategic goals.” explained Gelsinger.

The second criterion for evaluating the capital budget, as the Intel boss added, is “capital for expansion,” so to speak. It can and should be reviewed and adjusted to macroeconomic conditions in the short term. “We are looking for every opportunity to get as much efficiencies as possible from existing capacity, we are working more aggressively with equipment suppliers and we are doing everything we can to minimize the capital requirements for capacity expansion. This is where the biggest concessions are made” – said the CEO of the company.

CFO David Zinsner added that lab development found just the right scope to improve capital efficiency. Recall that Intel recently abandoned its intention to build a new research center in Oregon and decided to build a parking lot for employees on the site of the building planned for developers in Israel. Zinsner also stated that third-party funding sources for Intel projects are being used more actively this year than the company anticipated last year. It’s not just about tax breaks and government subsidies, but also about money from investors who, like Brookfield, agree to finance the construction of new Intel companies.

The decline in the yield to below 40% in the current quarter, according to Intel’s chief financial officer, does not take away his confidence that the indicator can return to the range of 51-53% in the medium term, and in the long term – in the range of 54 up to 58%. “I think Pat said before that we want to even exceed that level.” Zinsner closed.

He added that this year, too, the share of investments in sales will not exceed 35%, as dictated by the development plan for the IDM 2.0 model, since even a drop in sales will be partially compensated by an increase up to 20-30% of Company capital expenditures are funded from third party sources, including investor funds.

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Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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