10-KPeriod: FY2022

INTEL CORP Annual Report, Year Ended Dec 31, 2022

Filed January 27, 2023For Securities:INTC

Summary

Intel Corporation's (INTC) 2022 10-K filing reveals a challenging year marked by a significant revenue decline of 20% 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 billion 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.

Financial Highlights

57 data points
Beta

Revenue

$63.05B

42.6% Gross Margin

Net Income

$8.01B

12.7% Net Margin

EPS (Diluted)

$1.94

Total Assets

$182.10B

Cash & Equivalents

$11.14B

Free Cash Flow

-$9.41B

Financial Statements
Beta
Revenue$63.05B
Cost of Revenue$36.19B
Gross Profit$26.87B
R&D Expenses$17.53B
SG&A Expenses$7.00B
Operating Expenses$24.53B
Operating Income$2.33B
Interest Expense$496.00M
Net Income$8.01B
EPS (Basic)$1.95
EPS (Diluted)$1.94
Shares Outstanding (Basic)4.11B
Shares Outstanding (Diluted)4.12B

Key Highlights

  • 1Total revenue for 2022 was $63.1 billion, a 20% decrease from $79.0 billion in 2021.
  • 2Gross 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.
  • 3Research and Development (R&D) expenses increased by 15% to $17.5 billion, reflecting ongoing investment in the IDM 2.0 strategy and product roadmap.
  • 4Capital expenditures reached $24.8 billion in 2022, underscoring the significant investments in manufacturing capacity expansion.
  • 5The company is progressing with its IDM 2.0 strategy, including the groundbreaking of new fabs in Ohio and plans for significant investment in Europe.
  • 6Intel announced cost-cutting measures and restructuring actions to manage operating expenses and improve product execution.
  • 7Mobileye, a subsidiary, saw revenue growth of 35% in 2022, and its IPO was completed in Q4 2022.

Frequently Asked Questions

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%.

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.

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.

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.