Chip giant Intel (INTC) is set to report second-quarter earnings after the market closes on Thursday. The company is continuing its massive restructuring and is rumored to be laying off thousands of workers.
Intel is trying to regain market share it lost to rival AMD (AMD) as it works to build out its AI chip and third-party foundry businesses. It all comes as the PC market is in the early stages of a recovery after eight straight quarters of declines following the explosive growth the industry experienced at the start of the COVID-19 pandemic.
Intel is expected to report earnings per share (EPS) of $0.10 on revenue of $12.9 billion. The company saw EPS of $0.13 on revenue of $12.9 billion in the year-ago quarter, according to analyst estimates compiled by Bloomberg.
The chipmaker is also expected to lay off thousands of workers in the coming days, according to Bloomberg. The company is spending billions of dollars on factories and other facilities around the world in an effort to regain its share of the chip manufacturing industry, which is dominated by Taiwan Semiconductor (TSMC).
Intel’s Data Center and AI segment is expected to bring in $3 billion in the quarter, down 2.6% from the year-ago period of $3.1 billion. The Data Center and AI business offers Intel an opportunity to grow its revenue thanks to huge demand for its CPUs and GPUs to power AI applications. But Intel’s GPUs aren’t as sought-after as Nvidia’s (NVDA), which are seen as having the best overall chips for AI processing.
Shares of Intel are down 38% year to date, compared with AMD, which is down just 3.7%. Shares of Nvidia are up 127%.
While data centers and AI get most of the attention, Intel’s Client segment, which includes sales of chips for business and consumer computers, is still the largest business area.
For the quarter, Intel is expected to report Client revenue of $7.5 billion, an improvement of 6.1% from the year-ago quarter, when the company reported Client revenue of $6.7 billion.
However, Intel is facing a potentially existential threat in the PC space from an unlikely source: Qualcomm (QCOM). The company, better known for developing chips for smartphones and tablets, released its new Snapdragon X Elite PC chip in May as part of Microsoft’s new Surface Laptop and Surface Pro.
The chip offers better power and battery life than competing Intel and AMD chips, making it a quality rival to Apple’s own M-series chips. But Intel is expected to launch its answer to Qualcomm’s processor later this fall.
Then there’s Intel’s Foundry business. The company is opening up its foundries to outside chip designers in the hopes of creating a business that can rival TSMC’s own foundry business. But so far, Intel is its own biggest customer. And while it has customers lined up, including Microsoft, it will take time for the company to gain traction in the market.
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