01—Abstract
Summary
Summary of the 10-K filed January 27, 2022. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's 2021 Form 10-K details a year of significant strategic investment under its IDM 2.0 strategy, aiming for long-term revenue growth and product leadership.
Despite facing industry-wide supply constraints, Intel reported total revenue of $79.0 billiona, a slight increase from the previous year. The company made substantial investments in R&D ($15.2 billion) and capital expenditures ($18.7 billion) to bolster manufacturing capacity and accelerate its process technology roadmap. The "IDM 2.0" strategy involves leveraging internal factories, strategic use of external foundries, and building a new Intel Foundry Services (IFS) business.
Significant capital was allocated to new fab construction in Arizona and Ohio, as well as advanced packaging facilities. The company also saw growth in its Internet of Things Group (IOTG) and Mobileye segments, while facing a slight revenue decrease in its Data Center Group (DCG) due to competitive pressures and supply constraints.
Intel is actively managing its capital allocation, prioritizing business investment, including R&D and capital expenditures for IDM 2.0, while also planning for strategic acquisitions and maintaining its dividend. The company anticipates increased capital expenditures and potential pressure on free cash flow in the short term due to these investments, but expects a long-term acceleration in revenue growth.
02—Key points
Key Highlights
- Total revenue reached $79.0 billion, a 1% increase year-over-year, despite industry-wide supply constraints.
- Significant investment in IDM 2.0 strategy: $15.2 billion in R&D and $18.7 billion in capital expenditures.
- Major expansion plans for new fabs in Arizona and Ohio, involving over $40 billion in investment.
- Internet of Things Group (IOTG) revenue grew 33%, and Mobileye revenue grew 43%, driven by post-COVID economic recovery.
- Data Center Group (DCG) revenue decreased by 1% due to a competitive environment and supply constraints, impacting ASPs.
- Divestiture of NAND memory business to SK hynix was completed in the first closing.
- Continued commitment to returning cash to stockholders through dividends, though share repurchases are expected to decrease.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Intel Corp kept $0.25.
- Revenue$79.02B100.0%
- Cost of revenue−$35.21B44.6%
- Gross profit$43.81B55.4%
- Operating costs−$24.36B30.8%
- Operating income$19.46B24.6%
- Interest, other & tax$412.0M0.5%
- Net income$19.87B25.1%
Where FY2021 revenue went
$79.02B- Cost of revenue: $35.21B, 45% of revenue
- Operating income: $19.46B, 25% of revenue
- R&D: $15.19B, 19% of revenue
- SG&A: $6.54B, 8.3% of revenue
- Other operating costs: $2.63B, 3.3% of revenue
Kept 25% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed January 27, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $79.02B$77.87B | +1.5% |
| Cost of Revenue | $35.21B$34.26B | +2.8% |
| Gross Profit | $43.81B$43.61B | +0.5% |
| R&D Expenses | $15.19B$13.56B | +12.1% |
| SG&A Expenses | $6.54B$6.18B | +5.9% |
| Operating Expenses | $24.36B$19.93B | +22.2% |
| Operating Income | $19.46B$23.68B | −17.8% |
| Interest Expense | $597.00M$629.00M | −5.1% |
| Net Income | $19.87B$20.90B | −4.9% |
| EPS (Basic) | $4.89$4.98 | −1.8% |
| EPS (Diluted) | $4.86$4.94 | −1.6% |
| Shares Outstanding (Basic) | 4.06B4.20B | −3.3% |
| Shares Outstanding (Diluted) | 4.09B4.23B | −3.4% |
05—Questions
Frequently Asked Questions
What is Intel's primary strategic focus for the coming years?
Intel's primary strategic focus is the IDM 2.0 strategy, which aims to regain technology and product leadership by investing heavily in internal manufacturing capacity, strategically utilizing external foundries, and developing its Intel Foundry Services (IFS) business. This strategy involves significant capital expenditures and R&D to accelerate its process technology roadmap and drive long-term revenue growth.
How did supply constraints impact Intel's performance?
Industry-wide supply constraints, particularly for components and foundry capacity, impacted Intel's performance across several businesses in 2021. While Intel implemented measures to mitigate these bottlenecks, the company expects these constraints to persist into 2022 and anticipates they will continue to affect its ability to meet customer demand in certain areas.
What is the outlook for Intel's financial performance, particularly regarding investments and free cash flow?
Intel anticipates its capital expenditures will increase above historical levels for the next several years to support its IDM 2.0 strategy. While expecting strong cash from operations, these significant investments are expected to pressure free cash flow in the short term. However, the company projects long-term revenue to accelerate to a 10%-12% year-over-year growth rate by the end of its five-year horizon.
How is Intel addressing the competitive landscape, particularly from companies like AMD and those using ARM architecture?
Intel acknowledges the intensifying competition, particularly from AMD and ARM-based products (like those from Qualcomm and Apple). The company's IDM 2.0 strategy, including its focus on product leadership with its x86 and xPU offerings, open platforms, and manufacturing at scale, is designed to enhance its competitiveness and deliver leading products across various computing architectures.
06—Continue