“We are interested in resuming that position as the undisputed leader in process technology, and that is our commitment,” said Gelsinger. He took part in the earnings call along with outgoing CEO Bob Swan, although he doesn’t take over the role until three weeks later.
Yet it appears that investors are wary. The company’s stock fell nearly 10% on Friday, though it posted better-than-expected gains on Thursday.
The semiconductor giant reported fourth-quarter earnings of $ 1.42 per share on sales of $ 20 billion, earning the $ 1.10 in earnings per share on sales of $ 17.5 billion that Wall Street analysts had. predicted, defeated. Full year sales hit a record $ 77.9 billion, up 8% from 2019. Intel also announced it would increase its quarterly dividend.
Investors on Friday may also have commented on plans that executives discussed during Thursday’s earnings call to get the company back on track.
Gelsinger and Swan suggested during the call that Intel will likely keep production of the 7-nanometer chip in-house, although the company promised to provide more details about its manufacturing plans after Gelsinger took over.
“I had the opportunity this past week to personally examine the advancement of Intel’s 7-nanometer technology,” Gelsinger said during the interview. “Based on the initial assessments, I am pleased with the progress made in health and recovery from the 7-nanometer program. I am confident that the majority of our products will be manufactured in-house by 2023.”
However, Gelsinger added that because of the breadth of Intel’s portfolio, the company is likely to “expand our use of third-party foundries for certain technologies and products.”
By outsourcing some of its manufacturing, Intel could fill gaps in its product line in addressing manufacturing issues, analysts say.
However, some are concerned that this is not the case a quick fix, regardless of the approach Intel decides to take.
“Competitive threats remain the top concern,” Bank of America analysts said in a research note. They added that AMD could gain even more market share at the expense of Intel as it outsources production to TSMC, which will make more advanced processors by the time Intel’s 7-nanometer production ramps up in 2023.
“The world is becoming more and more digitally connected, expanding the market for us,” said Gelsinger. “There is a tremendous opportunity for Intel, but in order to seize these opportunities, we must deliver the best products and stay ahead of our customers’ needs. We must become more agile in a highly competitive market.”