SANTA CLARA, Calif. - Intel Corporation (NASDAQ:INTC) has announced a new financial reporting structure that aligns with its transition to a foundry operating model, aiming to enhance transparency, cost discipline, and returns.
The company provided recast financial results for 2023, 2022, and 2021 to support the new structure, which reflects its strategy for long-term growth and profitability, particularly for its Intel Foundry segment.
Intel CEO Pat Gelsinger stated that this move is a significant step in Intel's IDM 2.0 transformation, enhancing execution and establishing the industry's first systems foundry with geographically diverse manufacturing capacity. The goal is to position Intel as a leader in semiconductor manufacturing and fabless technology, driving sustainable growth.
The new operating model, effective from the first quarter of 2024, includes separate segments for Client Computing Group, Data Center and AI, Network and Edge, Intel Foundry, Altera, Mobileye, and Other. Intel Foundry will report revenues from both external customers and Intel Products, reflecting the company's focus on cost efficiency and scale growth.
Intel's CFO, Dave Zinsner, expressed confidence that the new model will unlock cost savings and operational efficiencies, contributing to Intel's financial targets of 60% non-GAAP gross margins and 40% non-GAAP operating margins by 2030.
Intel Foundry is expected to improve operating margins by increasing volume to leading-edge nodes and expanding its advanced packaging and external foundry business. The segment's operating losses are projected to peak in 2024, with a goal to reach break-even operating margins before the end of 2030.
For Intel Products, the new model promises greater financial visibility and accountability, with the potential for improved operating margins through leadership products, optimized design, and cost efficiencies.
Moreover, Lorenzo Flores has been appointed as CFO of Intel Foundry, effective April 8, 2024. Flores brings nearly three decades of financial experience in the semiconductor sector. The company will host an investor webinar to further discuss the financial framework for Intel Foundry.
This restructuring is part of Intel's broader strategy to enhance its competitiveness and shareholder value. The information for this article is based on a press release statement.
InvestingPro Insights
Intel Corporation's strategic shift towards a foundry operating model is underscored by its recent financial performance and market positioning. According to InvestingPro data, Intel's market capitalization stands at a robust $187.05 billion, reflecting investor confidence in the company's direction.
Despite a challenging period with a revenue decline of 14% over the last twelve months as of Q1 2023, the company has managed a quarterly revenue growth of 9.71% in Q1 2023, signaling potential recovery and adaptation to market demands.
InvestingPro Tips highlight Intel's expected net income growth this year and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. These insights are particularly relevant as Intel navigates its transformation and aims to enhance execution within its new foundry operating model. Moreover, with a Price / Book ratio of 1.77 as of the last twelve months ending Q1 2023, the company's stock is trading at a value that could attract investors looking for tangible assets backing.
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