On July 27, local time, global chip giant Intel announced its performance report for the second quarter of 2023。

Intel's second-quarter revenue was $12.9 billion, down 15 percent from a year earlier, higher than market expectations of 120 percent, according to earnings data..$200 million。Non-GAAP gross margin of 39.8%, down 5 percentage points。Net profit was $500 million, down 52%。Operating margin of 3.5%, down 5.8 percentage points, an increase of 6 percentage points。Earnings per share is 0.$13, down 54% from a year earlier, and Wall Street had expected a loss of 4 cents per share.。

The company's free cash flow was negative in the first quarter, exceeding $9 billion.。But as capital spending fell and inventory conditions improved, outflows fell to less than $3 billion in the second quarter.。

From the perspective of each business unit,

● Client Computing Group ("CCG"): Includes Intel's personal computer (PC) chip sales business。CCG's revenue in the second quarter was $6.8 billion, down 12% from a year earlier.。That's better than the $6.1 billion analysts expected and a big improvement from the 38% decline in the first quarter.。

● Data Center and AI ("DCAI"): Includes an extensive portfolio of central processing units (CPUs), domain-specific accelerators, and field programmable gate arrays (FGAs)。DCAI's second-quarter revenue was $4 billion, down 15% year-over-year and better-than-expected $3.8 billion.。

● Network and Edge ("NEX"): Includes programmable platforms and high-performance connectivity and computing solutions designed for the cloud networking, telecom networking, local edge, software and platform segments。NEX revenue was $1.4 billion in the second quarter, down 38% from a year earlier and slightly below analysts' estimates of 14.800 million dollars。

● Mobileye: including the development and deployment of advanced driver assistance systems (ADA) and autonomous driving technologies and solutions。Mobileye's second-quarter revenue was 4.$5.4 billion, down slightly by 1%。

● Intel Foundry Services ("IFS"): Delivers differentiated full-stack solutions including wafer fabrication, packaging, chiplet standards, and software。Revenue from this segment of the business surged 307% in the second quarter to 2.$3.2 billion, higher than market expectations of 1.500 million dollars。

Global PC market improves, Intel expects margin to improve in Q3

Over the past year, the PC market has fallen sharply due to a variety of factors, including the epidemic, and global inventories have been increasing.。

But the latest figures from Canalys show the oversupply is starting to ease。The decline in the global PC market slowed in the second quarter of 2023, with total desktop and laptop shipments falling 11.5%。Prior to this, shipments fell by more than 30% for two consecutive quarters。Second quarter shipments increased 11.9%, indicating that the market is expected to accelerate the recovery in the second half of this year。

PC market improvement prompts Intel to forecast higher profit margin in third quarter。Chief Financial Officer David Zinsner said that while the PC market is likely to return to "normal" trading conditions in the second half of the year, the inventory glut will weigh on the company's data center business for the rest of the year.。Intel continues to forecast a "modest recovery" in the second half of the year, with the midpoint of its revenue guidance for the quarter slightly above analysts' expectations.。

Edward Snyder, analyst at Charter Equity Research, said: "Intel's performance was driven almost entirely by a strong performance in desktop sales, which rebounded from near historic lows last quarter.。"

Intel expects third-quarter earnings of about 20 cents per share on revenue of about $12.9 billion to $13.9 billion.。That's better than analysts' estimates of adjusted earnings per share of 16 cents on revenue of 132.$200 million。In addition, Intel expects gross margin to be 43% in the third quarter.。

But the company is still in the early stages of turning a profit, and CEO Pat Gelsinger said Intel is at or slightly ahead of plans to adopt new manufacturing technology advances, and the company hopes to work to regain its technology leadership in chip technology by 2025.。

Intel shares have risen 31% this year, but it still underperforms gains in chip-related stocks。Philadelphia Stock Exchange Semiconductor Index Up 49% in 2023。

   

Intel: Seeing the opportunities presented by artificial intelligence, the next generation of Gaudi chips will be launched next year

   

Kissinger stressed on the call that Intel is pursuing the artificial intelligence market wholeheartedly。

Kissinger said: "We see artificial intelligence is permeating everything, there will be artificial intelligence chips for the edge, artificial intelligence chips for communication infrastructure, artificial intelligence chips for sensing devices and automotive equipment, we see our opportunities as a product provider and contract manufacturing and technology providers throughout the field.。"

In the field of artificial intelligence chips, Nvidia is currently a well-deserved giant。But Kissinger said customers are actively looking for alternatives to NVIDIA chips, and they are considering Intel's data center accelerator chips.。He added that not all AI-related jobs are what Nvidia graphics chips are good at.。

He revealed that the company's data center accelerator chips, including the next generation of Gaudi chips, are in the pipeline and will be launched next year.。

In addition to the data center, Intel will also use the huge potential of artificial intelligence in the PC market。Gelsinger said the company's next-generation Meteor Lake chips will "usher in the AIPC generation," and he compared the process of bringing AI to PCs to the company's past Centrino chip line, which brought WiFi capabilities to PCs as early as 2003.。

Intel believes AI-enabled PC chips will be critical as the process to and from the cloud or data center presents latency challenges。

Kissinger said: "If there is no latency, bandwidth or cost structure, there is no way to go to and from the cloud.。With that in mind, we do have the idea of bringing AI directly to the client and MeteorLake, which we will bring to market in the second half of this year.。He said it would be the first major PC offering to include native AI capabilities as well as the neural engine Intel is talking about.。

Kissinger said Intel currently has enough customer orders to sell at least $1 billion worth of AI chips by 2024.。