Intel CEO Pat Gelsinger is making a concerted effort to steer the company back on course amidst significant challenges, opting for substantial expense cuts instead of reducing his own salary like any honorable CEO would.
Rather than taking a pay cut, Gelsinger has introduced a $10 billion cost-reduction plan, which includes suspending the companies already lackluster dividends, discouraging investors, and leading to a sharp drop in stock prices.
This plan has also resulted in the layoff of nearly 18,000 employees following a concerning financial report.
In a further bid to reduce business expenditures, Intel has chosen to cancel one of its largest annual events, the “Intel Innovation” conference, which usually highlights the company’s latest hardware, upcoming technologies, and its future vision for both hardware and software.
Intel Innovation has played a crucial role in the company’s efforts to engage with the tech community, drive innovation, and encourage the adoption of its technologies across different industries.
However, this year, Intel has chosen to cancel the Innovation conference entirely, pushing the event to 2025. The postponement was announced via a message on the Innovation 2024 website (registration required) and through a separate email.
In place of the conference, Intel plans to hold smaller developer events.
Innovation 2024 Update
After careful consideration, we have made the decision to postpone our Intel-hosted event, Intel Innovation in September, until 2025. For the remainder of 2024, we will continue to host smaller, more targeted events, webinars, hackathons and meetups worldwide through Intel Connection and Intel AI Summit events, as well as have a presence at other industry moments.
Depending on your development needs, please leverage the following developer resources to learn more: developer.intel.com, developer.intel.com/ai, open.intel.com and intel.com/support. Click here for a full list of Developer events.
In a separate statement to PCMag, Intel cited its current financial challenges, explaining that they “are having to make some tough decisions as we continue to align our cost structure and work towards rebuilding a sustainable engine of process technology leadership.”
Under its current leadership, the company has struggled significantly, losing market share to rival AMD across all sectors, including mobile, desktop, and especially data centers.
Intel’s reputation for reliability has also taken a hit, as the company has been criticized for seemingly downplaying severe silicon degradation issues in its Raptor Lake processors, which encompass the 13th and 14th generations.
Despite securing billions of dollars from the U.S. government to support local processor production, Intel has decided to manufacture its upcoming Lunar Lake mobility processors using rival TSMC’s silicon.
Additionally, after receiving substantial funding from the Israeli government to build a production facility, Intel has indefinitely postponed the construction plans as CEO Pat Gelsinger attempts to manage the ongoing crisis.
In the second quarter of 2024, Intel reported $12.8 billion in revenue, marking a 1% decrease compared to the same period last year.
The company’s product business units generated $8.5 billion, reflecting a 4% year-over-year increase, with all units except Altera remaining profitable. These units collectively produced $2.9 billion in operating income, driven primarily by Intel’s Client Computing Group (CCG).
On the other hand, Intel’s Foundry division, responsible for over two-thirds of the company’s products and producing chips for third parties, earned $4.3 billion in the second quarter, slightly up from $4.2 billion in the same quarter of the previous year.
Despite the revenue increase, the Intel Foundry unit reported a deepened loss of $2.8 billion, which is higher than the $1.9 billion loss in Q2 2023 and the $2.5 billion loss in Q1 2024.
Intel may have secured $12.8 billion in revenue, but the company ultimately ended up with nothing to show for it. In fact, they reported a $1.6 billion loss, despite maintaining high revenue figures.
Following the Raptor Lake debacle, which involved issues like premature failure, silicon degradation, and oxidation, confidence in the Intel brand has plummeted to an all-time low. It’s highly likely that consumers will be turning away from Intel as they move forward.
The company is eager to regain stability and return to normal operations without relying on questionable tactics, such as raising core voltages on its processors to maintain excessive boost frequencies to boost performance and sales as such practices have led to issues like premature failure, silicon-level frequency degradation, and overall instability.
As previously noted, Pat’s plan doesn’t involve taking a personal pay cut or removing the executives who played a significant role in damaging the company’s reputation and allowing financial issues to escalate.
Instead, the focus is on mass layoffs, with over 15,000 employees worldwide receiving pink slips as part of Intel’s strategy to return to profitability.
Intel shares have taken a significant hit following a global hit in the stock market, exacerbated by the suspension of dividends, which were already minimal at just 12.5 cents.
This move has essentially eliminated any incentive for investors to put their money into the company. Now, both Intel, along with CEO Patrick Gelsinger and CFO David Zinsner, are facing a class action lawsuit filed in San Francisco federal court.
Shareholders claim they were blindsided when Intel revealed on August 1 that its foundry business, responsible for manufacturing chips on contract for other companies, was “floundering,” resulting in billions of dollars in additional costs even as revenue declined.
The shareholders argue that Intel concealed these issues until the financial losses became too severe to hide, forcing them to take drastic measures. They also allege that the company made materially false or misleading statements about its business and manufacturing capabilities, which artificially inflated its stock price between January 25 and August 1.
The lawsuit coincides with Intel’s decision to cut 15% of its workforce, amounting to more than 15,000 job losses, no doubt because Intel shareholders got raped following a monumental drop of 40% in just one month.
Intel’s 2024 Innovation conference was expected to serve as the launch platform for its upcoming Lunar Lake mobility chips, which were the only focal point of the company’s recent Computex presentation. Notably absent from the event was any significant mention of the Arrow Lake desktop processors, which share the same architecture as Lunar Lake but are produced using Intel’s less advanced manufacturing processes for the desktop segment.
Both the Lunar Lake and Arrow Lake processors are slated for release by the end of the year, and their successful launches are crucial for Intel as AMD continues to outperform them in both reliability and gaming performance with their X3D processors. Given Intel’s tarnished reputation, these launches are pivotal for the company.
However, due to significant budget cuts, Intel will forgo a live presentation of these processors at a major event this year, likely opting for a streamed online event instead.
Whether or not consumers choose to purchase Intel Core processors is secondary to the importance of maintaining a competitive market between AMD and Intel. This competition is essential for the industry.
The embargo on AMD’s next-generation Ryzen 5 9600X and Ryzen 7 9700X has lifted, leading to a mix of reviews. While the reception has been generally poor, these new Ryzen processors offer only fractional improvements in gaming performance compared to Zen 4, despite their lower power consumption.
Alternatively, figures from Skatterbench, Der8auer, Phoronix and others reveal that the new Ryzen processors show notable performance gains when manually tweaked with Precision Boost Overdrive. These adjustments can boost performance by over 10% from stock configuration, depending on the specific workload.
Naturally, most consumers lack the expertise or inclination to spend hours adjusting BIOS settings to achieve such performance gains.
As a result, the Ryzen 5 9600X and Ryzen 7 9700X may appear underwhelming compared to previous generations. This is largely because AMD has prioritized efficiency over raw performance, which has led to a perceived reduction in performance despite the improvements in efficiency.
In terms of pricing, AMD has attempted to appeal to consumers by reducing prices compared to the previous generation, but this is only when loosely comparing the same SKU within the Ryzen 7000 lineup.
For example, the Ryzen 7 7700X has a TDP of 105W and an MSRP of $399, while the Ryzen 7 9700X is priced at $359. This seems like an improvement until you realize that the Ryzen 7 9700X is constrained by a 65W TDP, which is closer to the Ryzen 7 7700 (non-X), which was priced at $329.
It appears AMD is capitalizing on Intel’s struggles by charging more for processors that offer less. The Ryzen 9700X might have been better positioned as the Ryzen 7 9700, offered at a lower price and bundled with a Wraith cooler, unlike the previous generation.
With Intel’s Arrow Lake expected to provide modest gains in single-core performance and lacking Hyper-Threading, alongside leaked Lunar Lake performance figures showcasing much of the same thing AMD seems to be taking advantage of consumers with their entry level and mid-range products.
Perhaps because they don’t view Arrow Lake as a significant threat?
Naturally, the Ryzen 7 7800X3D remains the fastest processor for raw gaming performance, and this hasn’t changed with the arrival of the new Zen 5 processors. The upcoming Ryzen 9 9950X, which has the same TDP as its predecessor will likely showcase the actual potential of Zen 5 when natively compared to Zen 4 but ultimately the new Ryzens are pretty mediocre.
Intel’s latest quarter has been a setback for the company, with its CPUs receiving widespread criticism for reliability that the company couldn’t cover up. Despite issuing several “mitigations” to address silicon degradation, these measures have reduced the performance of Raptor Lake processors.
As Intel struggles, AMD has progressed, but the lack of competition means consumers are effectively being overcharged for AMD’s products, which are being marketed as higher-caliber than they actually are.
