U.S. President Joe Biden puts his arm on Intel CEO Patrick Gelsinger during an event on the ongoing supply chain problems in the South Court Auditorium of the Eisenhower Executive Office Building on January 21, 2022 in Washington, DC. Gelsinger announced that Intel Corp would invest an initial $20 billion to develop a new semiconductor manufacturing plant in Ohio.
Chip Somodevilla | Getty Images
Intel reported fiscal fourth-quarter earnings, for the period ended Dec. 26, after the bell on Wednesday. Shares slipped about 3.5% in after-hours trading despite a beat.
Here’s how Intel did versus Refinitiv consensus estimates:
- EPS: $1.09, adjusted, versus $0.91 expected
- Revenue: $19.5 billion, adjusted, versus $18.31 billion expected
Intel said it expected $18.3 in adjusted sales in the first quarter of 2022, beating consensus analyst expectations of $17.62 billion.
Intel’s largest business, its Client Computing Group, was down 7% year-over-year to $10.1 billion, though it still beat analysts’ average estimate of $9.6 billion, according to FactSet. The Data Center Group unit also topped expectations, with revenue rising 20% to $7.3 billion, compared to the average estimate of $6.7 billion.
Pat Gelsinger took over as Intel CEO just under a year ago and set off on a period of massive capital expenditure. Under Gelsinger, Intel announced it will continue to manufacture its own PC and server chips and, in a strategy shift, would also begin to manufacture designs from other companies.
This strategy requires new facilities and investment.
Intel announced last week it plans to build a chip-making complex in Ohio which could house as many as eight fabs, or chip factories, with production set to begin in 2025. Intel said it would invest at least $20 billion to get the first two factories up and running.
The ultimate size of the Ohio complex is linked to legislation that would result in $52 billion in subsidy funding for semiconductor companies. Intel could spend as much as $100 billion if subsidies are approved. Gelsinger appeared at an event with President Biden last week to encourage Congress to pass legislation to authorize the bill’s full funding.
The Ohio investment follows plans announced last year to spend $20 billion expanding an existing facility in Arizona.
In February, Intel will present a broader overview of its strategy and technology roadmap to investors, who are closely watching Intel’s operating margins as it invests in additional production capacity.