Whether with PCs, data center or foundry, or all three, Intel will capitalize on AI

Intel Foundry Services sees more than 100% growth in 2023

It was a mixed bag from Intel this week as the company reported fourth quarter financials. The client computing group (CCG) showed strong growth compared to the same quarter in 2022, but data center and AI (DCAI) and network and edge (NEX) groups saw year-over-year revenue declines. Intel Foundry Services (IFS) is a bright spot with more than 100% growth in full year 2023 as compared to full year 2022. 

CEO Pat Gelsinger, who was brought in to execute a turnaround, led with IFS in his  prepared remarks. “Q4 was the culmination of a year of tremendous progress toward our [Integrated Device Manufacturing (IDM)] 2.0 transformation. We consistently executed on our plan to reestablish process leadership, further build out our capacity and foundry plans, greatly improved product execution, and began to execute on our mission to bring AI everywhere across our product segments.” 

Specific to the IFS business, Intel reported Q4 2023 revenue of $291 million, up 63% from the year-ago quarter. Compared to full year 2022, IFS delivered 103% revenue growth in 2023 to $952 million. 

To Gelsinger’s comment on AI, last year the company announced its “AI everywhere” strategy to bring AI-optimized silicon to the entire portfolio with early pushes on data center and client computing. Intel isn’t alone in pushing AI-optimized silicon into market, which Gelsinger brought back to the foundry business. 

“The rapid adoption of AI by all industries is proving to be a significant tailwind…as high-performance compute, an area where we have considerable wafter and packaging know-how and IP, is now one of the largest and fastest-growing segments of the semiconductor market.” 

Speaking more generally on the AI opportunity, Gelsinger said: “Intel continues its mission to bring AI everywhere. We see the AI workload as a key driver of the $1 trillion semiconductor TAM by 2030. And given our foundry and product offerings, we’re the only company able to participate in 100% of the TAM for AI silicon logic. We have already discussed how our 50-year heritage and high-performance computing transistors and our advanced packaging positions IFS to benefit from the accelerating move to AI. Within our product portfolio, we are the only company with the products, IP and ecosystem reach to empower customers to seamlessly integrate and effectively run AI in all their applications from the cloud through the network, into the enterprise client and edge.” 

Back to earnings, Intel’s fourth quarter revenue was $15.4 billion, up 10% year-over-year. Full year revenue was $54.2 billion, down 14% year-over-year. A review of the quarterly and 2023 figures “doesn’t tell the whole story,” Signal65 President and GM Ryan Shrout, formerly of Intel, wrote in MarketWatch

Discussing CCG and DCAI, Shrout wrote that “Intel’s two most important businesses…could not be on more divergent paths….Yet we are past the point of simply shrugging it off with a ‘better luck next time’ mentality.” Despite being the “dominant market share leader” in data center CPUs—and facing stiff competition from AMD—Intel’s performance “clearly isn’t enough to grow business…Intel’s data center group is having issues executing on a plan to capitalize on the AI computing craze.” 

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