Chips Act Corruption Begins: Intel Cuts Fab Buildout by $4B To Pay Billions In Dividends

The talk of the semiconductor world right now is how Intel’s business has exploded overnight in Q2 of 2022. Intel has reported a net loss of $454,000,000 in Q2 2022. This is Intel’s first GAAP net loss in over 30 years. The Covid work from home and datacenter booms allowed Intel to cover the rot of the core businesses of design and manufacturing semiconductors for 2 years.

Intel doesn’t have that luxury anymore as the global economy slows globally and the US is officially in a recession. While the rapid slowdown in the PCs industry is a big contributor, Intel also continues to lose market share in the rapidly growing datacenter business.

In the face of Intel’s first net loss in over 30 years, Intel’s executives have decided their shareholders short term pocketbooks are more important than the company

Finally, we paid dividends of $1.5 billion, a 5% increase year-over-year, and remain committed to growing the dividend over time.

David Zinsner, Intel CFO, 7/28/2022 at Intel’s Q2 2022 Earnings Call

We wouldn’t mind the action of continuing to pay dividends and growing them over time if it that didn’t affect their new fab buildouts and turn-around plan.

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We are also lowering core expenses in calendar year ’22

Pat Gelsinger, Intel CEO, 7/28/2022 at Intel’s Q2 2022 Earnings Call

This lowering of core expenses is directly tied to building less fabs.

CapEx, we’re revising down our forecast to $23 billion, $4 billion less than our previous guidance

David Zinsner, Intel CFO, 7/28/2022 at Intel’s Q2 2022 Earnings Call

semianalysis.substack.com/p/intel-cuts-fab-buildout-by-4b-to

AC

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