Intel's first quarter results were better-than-expected and new CEO Lip-Bu Tan said the company will undergo a restructuring to improve "execution and operational efficiency while empowering our engineers to create great products."
The chipmaker, which has been walloped by Nvidia and AMD, said it will aim to lower operating expenses in 2026 to $16 billion from $17 billion in 2025. Operating expenses in 2025 were previously projected to be $17.5 billion. The company didn't disclose a headcount figure for layoffs.
Intel reported a first quarter loss of 19 cents a share on revenue of $12.7 billion, flat with a year ago. Non-GAAP earnings were 13 cents a share. Intel was expected first quarter earnings of a penny a share on revenue of $12.3 billion.
As for the outlook, Intel projected second quarter revenue of $11.2 billion to $12.4 billion with break even non-GAAP earnings. It's possible that demand was pulled forward in the first quarter due to tariff concerns.
- Intel names Tan CEO
- Intel Q1 outlook light, Q4 better-than-expected
- Intel CEO Gelsinger out: 5 looming questions ahead
Tan said there are no quick fixes for Intel.
"The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth. I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. We are going back to basics by listening to our customers and making the changes needed to build the new Intel."
CFO David Zinsner said that the "current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook."
By the numbers:
- Intel's client computing group had revenue of $7.6 billion, down 8% from a year ago.
- Data center and AI revenue was $4.1 billion, up 8% from a year ago.
- Intel Foundry revenue was $4.7 billion, up 7% from a year ago.
Intel's AI strategy is emerging and Tan said the company will be focused on multiple workloads with a hefty dose of edge use cases. Stay tuned for the plan. Here's what Tan said on Intel's conference call:
- "There are many areas we need to improve, and there's no quick fixes. We must remain laser focused on execution," said Tan. "We need to fundamentally transform our culture and the way in which we operate. Organizational complexity and bureaucracies have been suffocating the innovation and agility we need to win. It takes too long for decisions to get made. New ideas and people who generate them have not been given the room or resources to incubate and grow. The unnecessary silos have led to bad execution."
- "We continue to identify ways to operate our manufacturing network more efficiently, I have directed our teams to find additional $2 billion of savings in our growth CapEx, taking our target for this year to $18 billion. We will continue to take closer look at our existing factory footprint to ensure that we are making the most efficient use of our in-store capacity before committing to any additional spending," said Tan.
- "We are taking a holistic approach to redefine our portfolio to optimize our products for new and emerging AI workloads. We are making necessary adjustments to our product roadmap, so that we are positioned to make the best-in-class products while staying laser focused on execution and ensuring on time delivery," he said.
- "Success in foundry business requires more than process technology manufacturing capabilities alone. It is first and foremost a customer service business, built on foundational principle of trust. And we need to instill customer service mindset across our foundry business," said Tan.
Holger Mueller, an analyst at Constellation Research, said:
"Intel does not manage to catch a break – though the management team has been able to deliver to guidance, which in itself is an achievement. New CEO Lip-Bu Tan is taking a page from the classic acceleration playbook – cut layers and elevate the value creators (for Intel its R&D, avoid unnecessary meetings, change OKRs, and also ask everybody to be in the office for 4 days a week). But the problem remains that Intel’s Client Computing Group keeps shrinking, and the growth of its Data Center and AI group cannot make up for it as it operates at a smaller base. Intel needs new growth and Tan needs to find it."
