INTEL, the biggest maker of personal computer (PC) processors, tumbled in late trading after giving a lacklustre forecast for the current period, indicating that it’s still struggling to return to the top tier of the chip industry.

Sales in the second quarter will be about US$13 billion, the company said on Thursday (Apr 25). That compares with an average analyst estimate of US$13.6 billion, according to data compiled by Bloomberg. Profit will be 10 US cents a share, minus certain items, versus a projection of 24 US cents.

The outlook signals that a push by chief executive officer Pat Gelsinger to revitalise Intel is going to take more time and money. Once the world’s dominant chipmaker, the company is lagging behind rivals such as Nvidia and Taiwan Semiconductor Manufacturing in revenue and technological know-how.

Intel shares fell as much as 7.2 per cent in extended trading after the report was released. The stock had already declined 30 per cent this year through the close, making it the second-worst performer on the Philadelphia Stock Exchange Semiconductor Index.

In the first quarter, the Santa Clara, California-based company had a profit of 18 US cents a share, excluding certain items, and revenue of US$12.7 billion. Analysts had estimated a profit of 13 US cents a share and sales of US$12.7 billion.

The chipmaker is reporting earnings for the first time under a new business structure that shows the financial performance of its manufacturing operations. Gelsinger has said the approach is a necessary step to make operations more efficient and competitive. Intel also has been building up a foundry business, which manufactures components for outside companies on a contract basis.

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Earlier this month, the company gave investors the first look at the financial state of its factory network. It was not encouraging. Spending on new plants has caused losses to widen, and Intel does not expect the business to reach a break-even point for several years.

Intel Foundry, the new division responsible for manufacturing, had sales of US$18.9 billion in 2023, down from US$27.5 billion the previous year. The unit had revenue of US$4.4 billion in the first quarter of 2024.

The foundry business had an operating loss of about US$2.5 billion in the first quarter, wider than the losses posted in the preceding quarter and the one a year earlier.

The company’s PC-related chip sales were US$7.5 billion, compared with an average estimate of US$7.4 billion. Its data centre and artificial intelligence division had revenue of US$3 billion, in line with Wall Street projections. Networking chips provided nearly US$1.4 billion of sales, beating an average estimate of US$1.3 billion.

Gross margin – or the percentage of sales remaining after deducting the cost of production – was 45.1 per cent in the quarter. That closely watched measure, which reflects the efficiency of Intel’s manufacturing operations, will be 43.5 per cent in the current period. Historically Intel has posted margins of more than 60 per cent. BLOOMBERG