Intel CEO: Earnings miss caused by ‘very sharp economic swing’

In This Article:

Intel CEO Pat Gelsinger joins Yahoo Finance to discuss the chip maker’s difficult quarter, its product lineup, the global economic slowdown, hiring and corporate culture, and the passage of the CHIPS Act.

Video Transcript

- Shares of Intel are sliding today after the company missed on earnings, prompting Wall Street to come out more cautiously on the stock today. The chip maker also lowered its full year guidance, warning of further product delays and a slowdown in the PC market. Intel CEO Pat Gelsinger joins us now. Pat, always nice to get some time with you. You didn't mince any words out there on the conference call last night about your disappointment with the quarter. So take us through that quarter. What went wrong?

PAT GELSINGER: Yeah. Clearly, as we look back in the quarter, mid quarter we saw a very sharp economic swing. US inflation, Europe, Ukraine, and China COVD. But it was also combined then with misses in our inventory understanding of our customers. And they created very sharp shifts. And some say cases 10 years we haven't seen customers move inventory positions that rapidly.

So major inventory corrections. And if you think about it, Sozz, they were building inventory for demand expansions for multiple years and we call match set issues in their supply chain, where they didn't have all the pieces to ship a product.

So major inventory corrections on the part of our customers, plus some of our own execution issues and. We sort of say, we put those three together, yeah, it was a market shift in the quarter, well below our expectations. And with that, we said, boy, we have to change our view of the rest of the year. Clearly, we lowered that guidance for the year. We believe that we're at the bottom. And we've said that very plainly that we're below the shipping rates of our customers to the end customers. So we see that building back naturally.

Also as we go into the second half, you have some of the natural cycles, holiday, Christmas cycles as well. So all of those give us confidence in the guide that we gave. But, yeah, it was a difficult conversation. And everything we're doing is about rebuilding the execution of the company. A great product line and PCs, best that we've had in five-plus years where. Our server roadmap is getting stronger as we go forward. Key new products. But, yeah, today is the first day of the new plan that we've laid out to the Street. A tough market.

- Pat, there's always these wild swings in the semiconductor industry. I believe the right term has always been booms and busts. How would you compare to what you're seeing now in the market compared to those prior periods?