Intel wont skimp on new processes but may cut hardware

Intel won’t skimp on new processes, but may cut hardware spending

Plunging PC revenues and a loss of position in the server segment put Intel in a difficult position to raise funds for a massive business transformation that would see it regain its technology leadership in the second half of the decade. Management is ready to save on equipment purchases, but will not reduce the cost of developing new technical procedures.

    Image source: Intel

Image source: Intel

This became known through the speech by Intel CFO David Zinsner at a technology conference MorganStanley this week. According to him, the company will conditionally divide investments into three areas for the coming years. “Mastering five technical processes in four years requires an investment that we definitely don’t want to touch. They are important for a number of reasons and they really drive the whole strategy forward.” Zinsner explained the immunity of the first component. Five technical processes in four years would have to be mastered, and Intel will make all the necessary investments for this.

The next component of capital spending is the construction of industrial buildings. This is also one of the focal points, since the building itself costs less than its full equipment and the construction time is four to five years. It is very difficult to predict what will happen during this period, as noted by Intel’s finance director. If the company has several free production buildings, it can quickly equip them with the necessary equipment according to the current situation.

The last block of costs is equipping the shops with production equipment, for which Intel is willing to show maximum flexibility in view of scarce subsidies. In its forecasts, the company’s management looks at a period of five to ten years and plans which technical processes will be in demand by the market and to what extent – not only by Intel itself, but also by its customers in the contract business area. Now that demand has shrunk, Intel could also lower the cost of core equipment.

Up to and including 2024, the company is ready to allocate up to 35% of its earnings for investments. This year, it could drop that level closer to 30%. At the same time, Intel relies not only on its own capital, but also on third-party sources of financing from external investors and government subsidies. In the USA, it can already look forward to a tax deduction of up to 25% of the capital costs incurred. In Europe, relevant legislation is still being drafted, but Intel is trying to claim similar benefits when setting up new companies in the region.

About the author

Dylan Harris

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

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