Intel posts Q1 revenue increase, but Q2 outlook fails to impress

Intel’s first quarter earning report gave company observers a lot to process, as it was the first since the company separated its foundry business from its chip design operations (the unit including Intel’s Client Computing Group, data center business, and other operations), and the first since Intel’s spin-off of its FPGA business took effect.

The bottom line, however, is that revenue for the first quarter was lower than expected and that the guidance Intel provided for second quarter revenue (much like the outlook it gave in January first Q1) did not do anything to ease investors’ nerves.

As for the actual numbers, Intel posted just over $12.7 billion in revenue in the first quarter, which was up 9% from the $11.7 billion reported in the first quarter last year, but less than the $12.78 billion that had been anticipated for the opening quarter of 2024. The second quarter guidance suggests sequential revenue of between $12.5 billion and $13.5 billion, giving the company a shot at sequential growth, but that outlook was below the $13.57 billion analysts have been expecting.

Among Intel’s traditional product businesses–the Client Computing Group (CCG), Data Center and AI (DCAI), and Network and Edge (NEX)--there was some good news to report. CCG, which includes chips for the new era of AI PCs, saw revenue increase 31% year-over-year to $7.5 billion, and DCAI revenue was up 5% to $3 billion. NEX sales fell about 8% to $1.4 billion.

But, there is more to the story, as other businesses–specifically the new Intel Foundry unit, the Altera FPGA business, and automotive technology group Mobileye–saw revenue fall for the first quarter. Intel Foundry revenue was $4.4 billion, down 10% year-over-year, news which comes not long after Intel said it posted a $7 billion operating loss on its foundry operations for 2023.

Meanwhile, Altera revenue slid by 58% year-over-year to $342 million, though the spin-off is in the midst of rebooting and rolling out new products to chase what it has described as a massive future market opportunity.

Intel’s other spin-off, Mobileye, beat revenue expectations for the quarter by reporting about $239 million in revenue, but that still represented a 48% year-over-year drop. The bar for anticipated revenue had been set low by an automotive sector that has been putting off new chip orders while drawing down existing inventories.