01—Abstract
Summary
Summary of the 10-K filed January 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's (INTC) 2022 10-K filing reveals a challenging year marked by a significant revenue decline of 20%a year-over-year, driven by macroeconomic headwinds affecting demand across key segments like Client Computing Group (CCG) and Data Center and AI Group (DCAI).
The company reported $63.1 billionb in revenue, with CCG down 23% and DCAI down 15%. Despite the revenue contraction and a substantial drop in gross margin to 42.6% (down from 55.4% in 2021), Intel continued to invest heavily in its IDM 2.0 strategy, with R&D expenses increasing by 15% to $17.5 billion and capital expenditures reaching $24.8 billion. Looking ahead, Intel remains committed to its long-term financial model and product leadership, emphasizing a five-nodes-in-four-years roadmap.
The company is strategically investing in manufacturing capacity, including new fabs in Ohio and expanding existing sites in Arizona and Europe. Financial flexibility is being managed through programs like SCIP and a partnership with Brookfield. While the macroeconomic environment is expected to remain challenging into 2023, Intel is focused on cost-cutting measures and operational efficiencies to drive long-term value and return to its target gross margin range.
02—Key points
Key Highlights
- Total revenue for 2022 was $63.1 billion, a 20% decrease from $79.0 billion in 2021.
- Gross margin declined significantly to 42.6% in 2022, down from 55.4% in 2021, impacted by lower revenue, higher unit costs, and increased period charges.
- Research and Development (R&D) expenses increased by 15% to $17.5 billion, reflecting ongoing investment in the IDM 2.0 strategy and product roadmap.
- Capital expenditures reached $24.8 billion in 2022, underscoring the significant investments in manufacturing capacity expansion.
- The company is progressing with its IDM 2.0 strategy, including the groundbreaking of new fabs in Ohio and plans for significant investment in Europe.
- Intel announced cost-cutting measures and restructuring actions to manage operating expenses and improve product execution.
- Mobileye, a subsidiary, saw revenue growth of 35% in 2022, and its IPO was completed in Q4 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Intel Corp kept $0.13.
- Revenue$63.05B100.0%
- Cost of revenue−$36.19B57.4%
- Gross profit$26.87B42.6%
- Operating costs−$24.53B38.9%
- Operating income$2.33B3.7%
- Interest, other & tax$5.68B9.0%
- Net income$8.01B12.7%
Where FY2022 revenue went
$63.05B- Cost of revenue: $36.19B, 57% of revenue
- R&D: $17.53B, 28% of revenue
- Operating income: $2.33B, 3.7% of revenue
- SG&A: $7.00B, 11% of revenue
Kept 3.7% as operating incomeOperating income $2.33B · 3.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed January 27, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $63.05B$79.02B | −20.2% |
| Cost of Revenue | $36.19B$35.21B | +2.8% |
| Gross Profit | $26.87B$43.81B | −38.7% |
| R&D Expenses | $17.53B$15.19B | +15.4% |
| SG&A Expenses | $7.00B$6.54B | +7.0% |
| Operating Expenses | $24.53B$24.36B | +0.7% |
| Operating Income | $2.33B$19.46B | −88.0% |
| Interest Expense | $496.00M$597.00M | −16.9% |
| Net Income | $8.01B$19.87B | −59.7% |
| EPS (Basic) | $1.95$4.89 | −60.1% |
| EPS (Diluted) | $1.94$4.86 | −60.1% |
| Shares Outstanding (Basic) | 4.11B4.06B | +1.2% |
| Shares Outstanding (Diluted) | 4.12B4.09B | +0.8% |
05—Questions
Frequently Asked Questions
What were the primary drivers for Intel's revenue decline in 2022?
Intel's revenue declined by 20% in 2022 primarily due to a challenging macroeconomic environment, which led to slowing consumer and enterprise demand. This impacted key segments like the Client Computing Group (CCG), down 23%, and the Data Center and AI Group (DCAI), down 15%.
How is Intel addressing the decline in profitability and investing in its future?
Intel is addressing the profitability decline through cost-cutting measures and operational efficiencies. Simultaneously, the company is heavily investing in its IDM 2.0 strategy, focusing on R&D and expanding manufacturing capacity. This includes a commitment to delivering five technology nodes in four years and significant capital investments in new fabrication facilities in the US and Europe.
What is Intel's strategy for returning to growth and improving financial performance?
Intel's strategy centers on product leadership, aiming for process technology leadership by 2025 with its five-nodes-in-four-years roadmap. The company is also focusing on manufacturing at scale through its IDM 2.0 strategy, expanding its foundry services (IFS), and strengthening its open platforms approach. Management is implementing cost controls and driving efficiencies, with an expectation to manage through the challenging macroeconomic environment and return to its long-term gross margin targets.
What is the status of the Tower Semiconductor acquisition?
Intel entered into a definitive agreement to acquire Tower Semiconductor Ltd. in Q1 2022. The transaction, valued at approximately $5.4 billion, is expected to advance Intel's IDM 2.0 strategy and accelerate its foundry business. While the target closing was Q1 2023, the transaction may close in the first half of 2023, subject to regulatory approvals and customary closing conditions.
06—Continue