“We’re interested in resuming that position of the unquestioned leader in process technology, and that’s our commitment,” Gelsinger said. He joined the earnings call along with outgoing CEO Bob Swan, though he doesn’t actually take over the role for three more weeks.
Still, it appears that investors are wary. The company’s stock fell nearly 10% on Friday, although it posted better-than-expected earnings Thursday.
The semiconductor giant reported fourth quarter earnings of $1.42 per share on revenue of $20 billion, beating the $1.10 in earnings per share on revenue of $17.5 billion Wall Street analysts had projected. Full year revenue hit a record $77.9 billion, up 8% from 2019. Intel also announced it would boost its quarterly dividend.
Investors on Friday may also have been reacting to the plans executives discussed during the Thursday earnings call for getting the company back on track.
Gelsinger and Swan suggested during the call that Intel is likely to keep production in-house for the 7-nanometer chip, though the company pledged to provide more details on its manufacturing plans after Gelsinger takes over.
“I’ve had the opportunity to personally examine progress on Intel’s 7-nanometer technology over the last week,” Gelsinger said during the call. “Based on initial reviews, I am pleased with the progress made on the health and recovery of the 7-nanometer program. I am confident that the majority of our 2023 products will be manufactured internally.”
Gelsinger added, however, that because of the breadth of Intel’s portfolio, the company will likely “expand our use of external foundries for certain technologies and products.”
Outsourcing some production could help Intel fill gaps in its product line as it addresses its manufacturing issues, analysts say.
However, some are concerned that there isn’t a quick fix, regardless of the approach Intel decides to take.
“Competitive threats remain the biggest concern,” Bank of America analysts said in a Thursday research note. They added that AMD could gain even more market share at Intel’s expense because it outsources production to TSMC, which will be making more advanced processors by the time Intel’s 7-nanometer production has ramped up in 2023.
“The world is becoming more digitally connected, expanding the market in front of us,” Gelsinger said. “There is an enormous opportunity ahead for Intel, but to be able to seize these opportunities, we have to deliver the best products and stay ahead of our customers’ needs. We need to become more agile in a very competitive market.”