Tag Archives: Pat Gelsinger

Business

Intel-owned Mobileye files S-1 for IPO

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Mobileye’s CEO Amnon Shashua poses with a Mobileye driverless vehicle at the Nasdaq Market site in New York, July 20, 2021.

Jeenah Moon | Reuters

Mobileye, an Intel-owned company that makes chips, maps, and software for self-driving cars, has filed for an IPO, according to a prospectus filed with the SEC on Friday.

Mobileye’s filling indicates strong revenue growth for the Israeli-based subsidiary, from $879 million in sales in 2019, to $967 million in 2020, to $1.39 billion last year. Losses have shrunk from $328 million in 2019 to $75 million last year.

The move to list Mobileye on the Nasdaq is part of Intel’s broader strategy to turn around its core business. Intel acquired the company for $15.3 billion in 2017 and had previously announced plans to take Mobileye public this year.

Intel previously said that it would use some funds from the Mobileye listing to build more chip factories as it embarks on a capital-intensive process to become a foundry for other chipmakers.

Mobileye, founded in 1999, has partnered with Audi, BMW, Volkswagen, GM, and Ford to develop advanced driving and safety features such as driver assist and lane-keeping using the company’s “EyeQ” camera, chips, and software. Mobileye CEO Amnon Shashua said in the filing that 50 companies are currently using the company’s technology across 800 vehicle models.

The prospectus says that Mobileye is planning to list Class A common stock, but did not provide the number of shares or price range for the proposed offering. Intel will maintain ownership of Class B shares that have ten times the votes of Class A shares, according to the prospectus, giving it control over the company’s board and other decisions.

Intel is looking to test the public markets at a time where the appetite for futuristic growth technology like self-driving cars have slowed significantly in the face of rising inflation and macroeconomic concerns.

Intel stock was up less than 1% in extended trading.

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Business

Shares rise after Tim Cook says supply chain improving

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The supply chain guru has spoken.

Apple CEO Tim Cook on Thursday eased investors’ fear that supply chain problems rattling industries across the globe are starting to improve for the iPhone maker.

Cook told CNBC he expects supply constraints to improve compared to the December quarter. And boy did Apple investors like that. Apple shares were up as much as 5% in after-hours trading Thursday. (Shares were up more than 4% Friday morning.)

Despite the excitement around the rosy picture Cook painted, his comments on the supply chain improvements weren’t much different from some of his peers in the industry. From Intel to Tesla, executives have offered similar predictions about improvements to the supply chain throughout 2022. The difference: Shares of those companies fell after earnings, while Apple got a nice boost from investors.

Why?

Remember: Cook has built his entire reputation on being a supply chain genius. It’s a big part of the reason why he got the CEO job after Steve Jobs stepped down over a decade ago. (Cook is reportedly famous for negotiating parts down to fractions of a cent, for example.)

In fact, an analyst asked Cook on Thursday if he’s happy with the structure of Apple’s supply chain. Spoiler alert: Cook said he has Apple’s supply chain just the way he wants it, injecting even more optimism into the idea his company can navigate Covid’s disruptions until the supply chain woes get sorted out over the coming year.

Still, Cook didn’t say much we hadn’t heard yet.

Tesla CEO Elon Musk CEO said on his company’s earnings call Wednesday the company faces tough supply constraints, especially for computer chips the vehicles need. But Musk still projected solid growth for Tesla throughout the year, even if it won’t be able to launch new products.

Intel CEO Pat Gelsinger also had positive things to say about the supply chain recently. He said last week he expects “incremental improvements” to the supply chain throughout 2022, which is very similar to what Cook said Thursday.

But things may be harder on smaller technology companies that make hardware. Sonos, the smart speaker company, raised prices last year due to extra costs in the supply chain. Roku, the maker of streaming video devices for TVs, warned investors last year its supply chain costs were hurting its margins. Companies like Xerox and Western Digital also had dire warnings for their supply chains this month.

Those are signals that smaller companies could have a harder time managing supply chain headaches than giants like Apple. (Even with all those extra costs, Apple continues to deliver incredible margins.)

Although it’s still early in the earnings season, the narrative coming out of tech companies is clear so far: Titans like Apple are well-positioned to shield themselves from the worst of the supply chain problems, and comments from Cook and his peers bode well for the entire industry going into next year.

For now, though, the market has shown it has faith in Cook’s supply chain predictions above anyone else’s.

–CNBC’s Robert Hum contributed to this report.

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Business

Intel (INTC) earnings Q4 2021

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Intel reported fiscal fourth-quarter earnings, for the period ended Dec. 26, after the bell on Wednesday. Shares slipped about 2% 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 billion 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.

Intel CEO Pat Gelsinger said in an interview that the annual drop in the group, which includes Intel’s PC chip business, was a function of customers and PC makers shifting sales from quarter to quarter. PC sales have been elevated since the start of the pandemic in 2020, including during last year’s December quarter.

“I wouldn’t read anything into the quarter-on-quarter,” Gelsinger said, adding that supply constraints were also a factor.

Gelsinger said that he continued to expect PC sales to be strong going forward. Microsoft on Tuesday reported that revenue in its personal computing group climbed almost 16% from a year earlier, topping estimates, and CEO Satya Nadella said that demand is strong across the business.

Intel’s Data Center Group unit also topped expectations, with revenue rising 20% to $7.3 billion, compared to the average estimate of $6.7 billion.

“The Q4 was really marked by the on-premise, enterprise, and government sector strength,” Gelsinger said. He added that some clients were having trouble getting parts such as ethernet power controllers which are needed to complete new servers using Intel’s chips.

Gelsinger said that the company’s next-generation server chip, called Sapphire Rapids, remained on schedule to start shipping this quarter and for production to ramp up in the second quarter. Analysts had worried about delays for the chip, which is manufactured on a new process.

Mobileye, the subsidiary that focuses on self-driving car technology, reported $356 million in sales during the quarter, which was a 7% annual increase. Intel said in December that it plans to take the unit public in an IPO.

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.

“First, we have to invest to catch up. We’re behind on capacity, you know, we would lust after having some free capacity today,” Gelsinger said.

Intel warned last quarter that its margin would shrink over the next two to three years as it invests in additional manufacturing capacity. Even with the lowered expectations, the company’s gross margin forecast for 52% in the first quarter still narrowly missed estimates of almost 53%.

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. Gelsinger said that Intel will present technical roadmaps for its consumer and data center chips.

Intel raised its quarterly cash dividend 5% to $0.365 per share.

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