Intel: New Products Must Deliver 50% Gross Profit To Get the Green Light (tomshardware.com)
- Reference: 0177939816
- News link: https://hardware.slashdot.org/story/25/06/05/2311240/intel-new-products-must-deliver-50-gross-profit-to-get-the-green-light
- Source link: https://www.tomshardware.com/tech-industry/semiconductors/intel-draws-a-line-in-the-sand-to-boost-gross-margins-new-products-must-deliver-50-percent-to-get-the-green-light
> Tan is reportedly "laser focused on the fact that we need to get our gross margins back up above 50%." To accomplish this, Tan is also said to be investigating and potentially cancelling or changing unprofitable deals with other companies. Intel's margins have slipped to new lows for the company in recent months. MacroTrends reports Intel's trailing 12 months gross margin for Q1 2025 was as low as 31.67%. Intel's gross margins had hovered around the 60% mark for the ten years leading up to the COVID-19 pandemic, falling beneath 50% in Q2 2022 and continuing to steadily fall ever since.
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> Holthaus predicts a "tug-of-war" to ensue within Intel in the coming months as engineers and executives reckon with being forced between a rock and a hard place. "We need to be building products that... fit the right competitive landscape and requirements of our customers, but also have the right cost structure in place. It really requires us to do both." [...] Tan is also quoted as wanting to turn Intel into an "engineering-focused company" again under his leadership. To reach this, Tan has committed to investing in recruiting and retaining top talent; "I believe Intel has lost some of this talent over the years; I want to create a culture of innovation empowerment." Maintaining a culture of empowering innovation and top talent seems, on its face, at odds with layoffs and a lock on projects not projected to gross 50% margins, but Tan seemingly has Intel investors on his side in these pursuits.
[1] https://www.tomshardware.com/tech-industry/semiconductors/intel-draws-a-line-in-the-sand-to-boost-gross-margins-new-products-must-deliver-50-percent-to-get-the-green-light
[2] https://www.investing.com/news/transcripts/intel-at-bank-of-america-conference-strategic-shifts-and-ai-focus-93CH-4079356
And that's how you become Boeing (Score:1)
Beancounter-centric, risk-adverse thinking is the surest way to the has-been heap. The new Moore's Law will be Intel's market share halving every 18 months.
Re: (Score:2)
You've gotta talk financial talk to the investors, but note that this is "gross profit margins", Which is just based on manufacturing costs; doesn't include R&D, marketing or sales costs.
idk what exactly that's going to mean for them. Maybe just focusing on chips (CPUs, GPUs, AI etc) rather than devices ? (video cards , wifi cards) ?
also that hedging even in TFA that "it's more of an internal goal" ... could be just meaningless corporate speak in the end.
Re: (Score:2)
Seriously - their best stuff is in NIC's, embedded (n100 etc), wifi, chipsets, etc.
Sounds like they're gonna 86 all that.
Meanwhile Chinese foundries will be delighted with RISC-V parts at 19% gross.
Somebody told me they hired an engineer to run the place - guess not.
Bye bye graphics market. (Score:2)
Arc, we hardly knew ye.
I looked at an Arc card in December, but thought "Nah, Intel is going to pull the plug again."
Re: (Score:3)
Was thinking the same thing. The one place in the market where they could have taken serious share while nVidia and AMD are distracted by AI chip production (and the market doesn't want Intel's AI chips) - and intel's GPU's are not half bad. Bummer.
Re: (Score:2)
If you could get them for MSRP that would be one thing but you can buy a weird off-brand for$50 over MSRP or you can pay $400 for the actual Intel card...
At that point especially today you're going to buy a 9060 XT 16 gig or a 5060 16 gig. The latter is basically useless on a pcie 3.0 board thanks to the crippled 8X PCI Lanes but it looks like the 9060 XT is readily available for around $400. The b580 just cannot compete.
I heard that there was supposed to be more supply coming but the only justifica
My freind Kay works for Intel (Score:1)
She says the new MART-series processors expect just a 25% gross margin. The scuttlebut says they are needed for something special so they got blue-lighted.
Re: (Score:2)
My instinct is that products with a lower gross margin may be good for the company if they advance their knowlege/skills or support other higher margin chips. It seems arbitrary to just say: "50%".
Re: My freind Kay works for Intel (Score:2)
I read this post in the voice of philomena cunk as a "My mate Paul..." quote all the way to the end before I realized you did not intend it that way
Intel's Formula for Success (Score:2)
1. Make competitive products.
2. Make them as efficiently as possibly to reduce costs.
3. Sell them at competitive products.
4. Demonstrate their value to the consumer.
Re: (Score:2)
3. Sell them at competitive PRICES.
Bloat (Score:1)
Your company succeeds, you hire a bunch of people, they hire a bunch of people, and soon you spend most of your time "doing company stuff" and very little doing what made you great. You do not notice for awhile, but then your competition finally get good. The only way out of the spin is to fire everyone but the highly useful and make competitive products. The market has changed and Intel got fat and lazy cranking up marginal improvements in desktop chips but now people want less medium iron and more light c
Desperation (Score:2)
That kind of move is not an indication of a company that is determined to get back on its feet. It's short-term gain at the expense of long term success. That's what you do when you're desperate and believe you have lost.
Lol (Score:3)
There goes their marketshare. The only reason why they stayed in the datacenter market at all was low margins/discounted product. They cut a lot of deals to get people to buy Sapphire Rapids. That memory has not faded. DC customers are going to demand more discounts if they're expected to buy delayed products. Given Intel's current track record, they'll probably miss their ideal ship date for Diamond Rapids.
Re: (Score:3)
It seems like a potentially bigger threat to any adventures outside of their 'core' products they want to try.
If I'm just buying a CPU from them that's a fairly low risk bet. Very mature compiler target; more or less a known quantity once benchmarks are available barring the discovery of some issue serious enough to be RMA material. Even if they decide to quit on that specific flavor of CPU the ones I have and the remaining stock should continue to just work until nobody really cares anymore.
If it's s