Applied Materials Hit Hard Financially as Intel's Largest Supplier
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Intel faces severe financial losses, with $6.8 billion lost in 2023 and continued challenges in 2024, leading to reduced capital expenditures.
As Intel’s largest supplier, Applied Materials has seen a sharp revenue decline, losing $1.2 billion in 2023 and $600 million in early 2024 due to Intel’s cutbacks.
Intel is considering outsourcing chip production to TSMC, selling non-core divisions, and implementing major cost reductions to address its financial issues.
Intel's Financial Performance Overview
Intel Corporation (INTC) has faced significant financial challenges over the past year, with a series of quarterly losses that have raised concerns among investors and industry analysts alike. For the fiscal year 2023, Intel reported a substantial net loss of $6.8 billion, a stark contrast to the previous year’s profit of $10.8 billion. This decline was driven by several factors, including supply chain disruptions, increased competition, and delayed technology rollouts.
The company’s revenue for 2023 totaled $63 billion, marking a decrease of approximately 12% from the previous year. This decline was accompanied by a reduced capital expenditure budget, down from $26 billion in 2022 to $21 billion in 2023. The lower capital spending was largely a result of Intel's strategy to cut back on investments amidst ongoing financial instability and its struggles with the 1.9nm technology node.
In the first quarter of 2024, Intel reported a net loss of $1.7 billion, with revenue dropping to $14 billion, reflecting continued financial pressure. These issues persisted into the second quarter, with a further loss of $1.5 billion and revenue of $13.5 billion, underscoring the company’s ongoing difficulties.
The Impact on Applied Materials
Applied Materials (AMAT), a leading supplier of semiconductor equipment, has been significantly affected by Intel’s financial woes. In 2023, I estimate that Applied Materials experienced