Rewards planning will be pushed further
Second half 2023 macro will improve
ELT will have an additional round of layoffs around 15-20%
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Here are my takeaways:
1- They said “this is the bottom” in q3. But now this is the bottom….
2- Intel is not going to be best in class costs. I mean TSMC or even AMD probably does not have the bloated amount of ICs that make >250k per year. ( except for maybe in key engineering areas).
3- The next wave of layoffs will happen like Google did them. Too much loss in production with long CPM process.
4- This is not as simple as a business cycle. Even when the cycle picks up….intel will not
recover TAM lost to AMD and ARM.
There is a world in which Intel executes well and demonstrates process and product leadership by 2025. At that point a strong sales team will be needed to fill the fabs and to consume the products. I think Pat has improved execution to where this is at least 50-50. I'm more bullish about this scenario than peers.
More layoffs for certain. This has been expected by the higher ups since the first wave. Mostly described as 'we'll see how it goes' - well it's gone south so I can't see them not do this.
They'll shut down some more programs. But I think they'll get nervous about retaining what talent they do have, and keep the rewards move as is. They won't have zero day QPBs, they'll prop them up with those cost saving topups. Maybe engineering will be hit worse as it was pretty sheltered from the first wave, at least in my org. A lot of green badges, hr, it, etc were cut as easy sacrifices, but they need to get rid of at least the waste in engineering. Although, I don't have faith they would actually cut bad employees, just something statistical.
Dividends will remain or stock will dive further. That said, probably in for another drop in price with the next Quarters call. Even pat admits we're in a bad place and it'll stay bad for a bit. They're probably a bit optimistic on when they'll be out of the "saddle period" as he loves to call it.
Intel will have a small recovery not from anything they've actually done, but from the economy picking up again. They'll pass it off as somehow their achievement. Doubt it will go back to 40 for a few years though
The recession and semiconductor decline stops in Q2 but Intel pain continues. It will lose sever market share to AMD all four quarters. Q4 will finally see Intel grow again after three more quarters of loss and declines.
Gross margins will continue to decline and in Q2 Intel has to cut dividends causing the stock to plunge into the teens
Ramp of I4 will slip to 2024.
Ohio fab shells will be put on hold and Germany and Italy will stop.