Intel’s CEO has revealed that the company’s profitability has fallen by 600 points as a result of the massive capital investments into advanced foundries across the US, Europe, and Israel. Reiterating the importance of the CHIPS Act, Gelsinger stated that Intel’s cash flows are in the red for the first time in three decades. Overall, the chipmaker’s investments have more than doubled, and yet investors (and analysts) have refused to back it up.
We’ve already wasted several quarters since the Senate acted last year, and now it’s time for us to move forward rapidly. I’ve lowered our profitability by 600 basis points this year. I’ve made the company free cash flow negative for the first time in three decades. I’ve doubled our capital investments, all to the howls of Wall Street.Pat Gelsinger, Intel CEO
Urging the US Congress to pass the CHIPS Act, Gelsinger lamented the repeated delays faced by the bill and the repeated pushbacks from Wall Street. Although the Intel CEO is confident that the construction of the newly announced fabs would continue even without the funding, it’ll be limited in scope and likely face delays.
The CHIPS Act is intended, from my perspective, to enable me to go bigger and faster than the bold commitments that we have already made that have received very negative responses from Wall Street. We want to do more and faster. This is all about restoring US [competition], bringing back this mantle from Asia on a critical industry, not only for our economy but also our national security.Pat Gelsinger, Intel CEO
Intel believes that the CHIPS Act will allow it to go all out on its promises in a timely manner: Building more fabs, better fabs, faster and on US soil. The years-old claim of bringing back the supply chain to the West is still being pitched, something that gets rejected by analysts and investors again and again. Intel has also halted its stock buyback program on account of the “radical increase” in capital expenditures.
Via: The Register