Intel's Russia Operations Report Zero Revenue in 2023, Leaving Only One Employee

Intel's operations in Russia were drastically pared back in 2023, leaving just one employee as the director of both Intel AO and Intel Technologies. Alina Klushina is listed as the director of both Intel’s Russian entities. The mothballed businesses incurred losses of $2.31 million over the last year. The decline of Intel’s Russia operations began in April 2022 after the invasion of Ukraine. In 2021, Intel’s Russian businesses brought in a combined revenue of around $80 million. In 2022, Intel suspended operations in Russia, which had 1,200 employees at the time. In 2023, Intel AO and Intel Technologies revenues were down to zero, and losses of $2.31 million were recorded. Intel had 788 employees in Russia at the start of the year. In 2024, Alina Klushina is the sole employee, acting as the director of both Intel AO and Intel Technologies. Intel opened its Nizhny Novgorod research and development center in 2000 and employed over 1,000 individuals at the time. Intel seems to be maintaining its Russian properties, watched over by Klushina, in the hope of favorable political developments. The firm restored user access to driver downloads but reports suggest that the applied sanctions have failed in practical terms. In January, Russian entities bought up to $1.7 billion worth of Intel and AMD chips in 2023. Intel is expected to incur losses of a similar scale in the coming year to maintain its mothballed operations [88d55fee].

Intel's financial results reflect the company's ongoing challenges in the semiconductor industry. The company's new division, Intel Foundry, experienced a significant drop in sales, with revenue decreasing from $27.5 billion in the previous year to $18.9 billion in 2023. Additionally, the operating loss at Intel Foundry increased from $5.2 billion in 2022 to $7 billion in 2023 [8cc2c1c8].

Intel's foundry unit is 'fully dependent' on its internal design team, which is seen as a red flag by Bank of America. The future of Intel is tied to CEO Pat Gelsinger's vision to turn the company into a semiconductor foundry and compete with Taiwan Semiconductor and others. However, the foundry unit's reliance on Intel's internal design team makes the whole company worth less [ccf26bad].

Intel's financial challenges have led the company to embark on an ambitious expansion of its factories in the US and Europe. Despite concerns among investors, Intel has secured Microsoft Corp. as a customer for its foundry business and is ahead of schedule in signing up other clients [8cc2c1c8].

Intel's Q1 2024 earnings report provides insight into the company's performance and its efforts to address its financial challenges. The company's transition into a more independent unit and its focus on the foundry business will be crucial for its future success in the semiconductor industry. Intel faces tough competition from companies like Taiwan Semiconductor and Samsung, which have received significant support from the US government. Intel's ability to compete and regain its position in the market will depend on its ability to innovate and attract customers [cce05449].

Meta Platforms, the parent company of Facebook and Instagram, disappointed investors with forecasts of higher expenses and lighter than expected revenue. The company expects April-June revenue in the range of $36.5 billion-$39 billion, with a midpoint of $37.8 billion, compared to analysts' estimates of $38.3 billion. Meta raised its forecast for expenses this year to support investments in new AI products and computing infrastructure, with 2024 capital expenditure expected to fall within a range of $30 billion-$40 billion. The company's shares dropped about 13% following the report, resulting in a $160 billion loss in stock market value. Meta has been updating its ad-buying products with AI tools and short video formats to boost revenue growth and is giving its Meta AI assistant more prominent billing across its suite of apps. However, analysts warn that Meta should not neglect its core advertising activities. Meta posted first-quarter revenue of $36.5 billion, in line with expectations, and its daily active people (DAP) metric grew 7% [1b2bf9be].

Intel's Q1 2024 earnings report and Meta Platforms' revenue forecast highlight the challenges faced by both companies in the AI market. While Intel is striving to regain its position in the semiconductor industry, Meta is investing heavily in AI products and infrastructure to drive revenue growth. Both companies face tough competition and the need to innovate to stay ahead [cce05449] [1b2bf9be].

According to an analyst forecast, NVIDIA is expected to dominate the AI market in 2024 with $40 billion in GPU sales, significantly outpacing AMD and Intel. AMD is projected to generate $3.5 billion in AI GPU sales, while Intel is forecasted to reach only $500 million. The widening gap between the companies in the AI race is evident, with NVIDIA's revenue expected to be 80 times higher than Intel's. Despite optimism around AMD's Instinct lineup of accelerators, none of their GPUs appeared in the latest MLPerf v4.0 benchmarks, where Intel was the only alternative to NVIDIA's AI GPUs. Intel's Gaudi-3 AI accelerators are expected to generate $500 million in revenue this year, lower than expected. The future of the AI market is still hopeful for other companies, but NVIDIA's dominant position is unlikely to be broken with the debut of their Blackwell AI GPU architecture [e0e6f1ac].

The price of AI coins will rise significantly in the wake of Nvidia's impending earnings. Nvidia's previous results boosted investor confidence in the AI space. The United States' sanctions against Chinese chip manufacturers last year sparked competition between the two countries in the AI race. Nvidia's upcoming earnings will be a major boost to the price of AI coins. In the previous quarter, Nvidia recorded adjusted profits per share (EPS) of $5.16 on $22.1 billion in revenue. Factors from Nvidia's earnings that can affect AI coins and the market include the impact of China sanctions and repercussions, and the AI supply chain dynamics. AI coins are closely tied to the AI market sphere, and if Nvidia's results further cement the idea that AI will be a major revenue stream for IT companies, AI coins could see a price surge in the future. [4142458b]