Intel stock drops 6% as company updates chip manufacturing plans

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2 years ago

June 21, 2023

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Intel CEO Pat Gelsinger speaks during the Mobileye Global Inc. IPO at the Nasdaq MarketSite in New York on Oct. 26, 2022. Mobileye Global Inc., the self-driving technology company owned by Intel Corp., priced one of the biggest US initial public offerings of the year above its marketed range to raise $861 million.

Michael Nagle | Bloomberg | Getty Images

Intel stock dropped 6% on Wednesday after the company gave investors an update on the company’s turnaround plan to become a chip manufacturing company competing with Taiwan Semiconductor Manufacturing Company.

Wednesday’s update featured Intel’s CFO, David Zinsner, explaining how the company would soon change the way it reports its financial results to give its foundry business, known as IFS, its own profit-and-loss statement, which would reveal the company’s manufacturing margins.

Intel’s new reporting structure could also help control costs at the chipmaker, which is seeking to trim as much as $10 billion from its costs over the next three years.

The update comes as investors continue to assess Intel’s turnaround plan under CEO Pat Gelsinger, which depends on catching up with TSMC’s manufacturing technology by 2026, a plan it calls “five nodes in four years.” Intel plans to use its own chips to work out problems in its manufacturing before opening up the factories to third-party companies.

If Intel catches up with TSMC, then it can compete for contracts to build high-performance chips from companies like Apple, Nvidia, and Qualcomm, which don’t run their own manufacturing and currently often opt for TSMC or Samsung manufacturing. Intel said it expected to announce a key customer for its foundry business later this year.

“The manufacturing group will now face the same market dynamics as their foundry counterparts,” Zinsner told analysts. “They’ll need to compete for volume through performance and price as internal customers will have the option to leverage third party foundries and to attract external foundry volume, they must do the same.”

Wednesday’s update was focused on how Intel would use its manufacturing capabilities for its own chips. It said more updates on the foundry business and third-party customers would come later this year. It said its own chip needs would contribute $20 billion in revenue to the unit next year.

Analysts on the call worried about Intel’s gross margins and asked how this plan would increase them. In April, Intel said its gross margin for the first quarter was 38.4%, down 51.3% in a year. Intel management said on Wednesday it was shooting for 60% margins.

“We think we have a good path to 60 [percent],” Zinsner said.

Separately, Intel said on Wednesday that it planned to sell 20% of an Austrian subsidiary, IMS Nanofabrication, to private equity firm Bain Capital in a deal that valued the unit at $4.3 billion.

“This will turn out to be one of the best acquisitions we’ve ever made, given that level of valuation and investment made,” Zinsner said on Wednesday.

Other chip stocks also fell on Wednesday amid a down day for tech stocks. AMD, Intel’s chief rival, fell nearly 6%, while Qualcomm fell over 3%. Nvidia, which has been boosted by the recent AI wave, fell less than 2%.

Technology

Spotify says it paid nearly 1,500 artists $1 million or more in royalties for 2024 streams

Published

2 hours ago

March 12, 2025

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Spotify says it paid nearly 1,500 artists million or more in royalties for 2024 streams

In this photo illustration, the Spotify music app is seen on a phone on June 04, 2024 in New York City.

Michael M. Santiago | Getty Images

Spotify is minting music millionaires.

Nearly 1,500 artists generated over $1 million in royalties from Spotify in 2024, the company said Wednesday in its annual Loud and Clear Report.

Spotify said more than 80% of the artists in that pool didn’t have a song reach the app’s Global Daily Top 50 chart.

“Spotify has helped level the playing field for artists at every stage of their careers,” read a portion of the report. “Success in the streaming era doesn’t require a decade-spanning catalog nor a chart-topping hit.”

The news comes about a month after the company reported a fourth-quarter earnings beat that saw the Swedish music streamer record its first full year of profitability. The company said it paid an all-time high of $10 billion in royalties to the music industry for the year.

Technology

Salesforce pledges to invest $1 billion in Singapore over five years in AI push

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16 hours ago

March 12, 2025

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Salesforce pledges to invest billion in Singapore over five years in AI push

Marc Benioff, Chairman & CEO of Salesforce, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 22nd, 2025.

Gerry Miller | CNBC

Salesforce on Wednesday announced plans to invest $1 billion in Singapore over the next five years.

The cloud software giant said the investment is designed to accelerate the country’s digital transformation and the adoption of Salesforce’s flagship AI offering Agentforce.

Salesforce is among the many technology companies hoping to boost revenue with generative AI features.

The company launched the newest version of Agentforce last month. It has previously described the system — which it says can tackle sophisticated questions in Salesforce’s Slack communications app, based on all available data — as the first digital AI platform for enterprises.

Salesforce CEO Marc Benioff is scheduled to speak at CNBC’s CONVERGE LIVE at around 9:25 a.m. Singapore time (9:25 p.m. ET) on Wednesday.

“We are in an incredible new era of digital labor where every business will be transformed by autonomous agents that augment the work of humans, revolutionizing productivity and enabling every company to scale without limits,” Benioff said in a statement.

“Singapore is at the forefront of this shift, and as the world’s largest provider of digital labor through our Agentforce platform,” he added.

Salesforce said Agentforce can help Singapore to “rapidly expand” its labor force in several key service and public sector roles at a time when the country is grappling with an aging population and declining birth rates.

Jermaine Loy, managing director of the Singapore Economic Development Board, welcomed Salesforce’s investment, saying it will help to boost the country’s efforts “to build a vibrant hub for AI innovation.”

— CNBC’s Jordan Novet contributed to this report.

Technology

Reddit rallies after three-day slump as analyst calls sell-off ‘excessive’

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22 hours ago

March 11, 2025

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Reddit rallies after three-day slump as analyst calls sell-off 'excessive'

Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing a bell on the floor setting the share price at $47 in its initial public offering (IPO) on March 21, 2024 in New York City.

Spencer Platt | Getty Images News | Getty Images

Reddit shares rose more than 10% on Tuesday, reversing a three-day slump that coincided with a broader decline among technology companies.

Despite Tuesday’s gains, Reddit shares are still roughly 30% below the close on Wednesday.

Reddit’s stock market upswing was likely bolstered by a Loop Capital analyst note published Tuesday that reiterated a buy rating and characterized the company’s shares as “extremely attractive.” The analyst note said that Reddit’s 50% drop on Wall Street in the past month “is excessive,” and that the social media company “has the biggest upside potential relative to Street estimates in our coverage universe.”

The company’s shares dropped more than 15% in February after the company reported weaker-than-expected fourth-quarter user numbers as a result of a Google search change that temporarily hurt its search-derived traffic. Although Reddit said at the time that it had recovered from the algorithmic shift, the user number miss spooked investors.

Reddit’s shares have since spiraled downward along with other tech companies like Apple, Nvidia and Tesla off of concerns related to President Donald Trump‘s tariffs and growing fears of a recession. The seven most valuable tech companies lost more than $750 billion in market value on Monday with Nasdaq experiencing its biggest decline since 2022.

Loop Capital managing director Alan Gould acknowledged in the note that investors are operating in a “risk-off market environment,” but he contended that Reddit “has been one of the top performing stocks over the past year,” aside from its most recent dip.

“RDDT wildly exceeded ours and Street estimates for 2024, which explains why the stock increased almost 7-fold from a $34 IPO price to a peak of $230 in less than a year,” Gould wrote, noting Reddit’s growing revenue and improved advertising tools, among other positive developments.

Reddit’s fourth-quarter sales grew 71% year over year to $428 million, which represents the fastest growth rate for any quarter since 2022.

“In our view, RDDT deserves the revaluation it had experiencing based on the growth it has shown in the recent earnings reports and future projected growth driven by the ability to narrow the ARPU gap, and data licensing possibilities,” Gould wrote.