Intel Corporation, a prominent player in semiconductor technology, announced a collaborative initiative on Tuesday with Saimemory, a subsidiary of SoftBank Group Corporation, to pioneer next-generation memory technologies tailored to the evolving requirements of artificial intelligence (AI) and high-performance computing sectors. This concerted effort, termed the Z-Angle Memory program or ZAM, is set to produce prototype memory technology by 2027, with plans for full commercialization targeted by 2030.
The ZAM initiative is built upon Intel's extensive expertise in memory design and development, including contributions from the U.S. Department of Energy’s Advanced Memory Technology program. This DOE program has significantly advanced the performance and power efficiency of next-generation dynamic random-access memory (DRAM) architectures intended for computers and server applications.
Addressing the rapid escalation in AI-driven demand for memory resources, the collaboration targets energy-efficient memory solutions that aim to alleviate existing supply limitations. Intel’s novel memory architecture combined with innovative assembly methodologies is focused on enhancing memory performance while simultaneously curbing energy consumption and production costs. This technological progression is anticipated to facilitate widespread adoption across the computing landscape throughout the next decade.
In parallel with this announcement, Intel recently released its fourth-quarter financial results, which reflected mixed outcomes. The company surpassed profit expectations but projected weaker revenue growth and flat earnings for the near term, highlighting ongoing complexities in its business turnaround. Challenges such as supply constraints and margin compression have contributed to an uncertain outlook and a consequential decline in Intel’s stock valuation.
For the fourth quarter, Intel reported revenue totalling $13.67 billion, slightly above the analyst consensus estimate of $13.37 billion. Adjusted earnings per share reached 15 cents, outperforming expectations of 8 cents per share. Nonetheless, revenue represented a 4% decrease year-over-year. Growth in Data Center and AI segments offered some offset against declines in the Client Computing Group.
Looking ahead to the first quarter, management forecasted revenue ranging from $11.7 billion to $12.7 billion, which falls short of the $12.49 billion consensus estimate. Adjusted earnings per share are projected to break even, a less robust performance compared to the modest profits anticipated by analysts.
Industry analysts offer insights on Intel’s current circumstances. Needham’s N. Quinn Bolton emphasized that supply bottlenecks, particularly impacting Intel’s 10-nanometer and 7-nanometer process technologies, continue to restrict shipment volumes. Bolton also noted that Intel expects adjusted gross margins to settle at approximately 34.5% at the midpoint, pressured by an unfavorable product mix.
From Benchmark, analyst Cody Acree described the stock pullback as a reaction to conservative corporate guidance despite strong quarterly results. Acree underlined that Intel is navigating a significant transition phase, marked by developments such as the anticipated 18-angstrom (18A) process node and the initial rollout of the Core Ultra Series 3 processor lineup.
JP Morgan’s Harlan Sur attributed the subdued guidance to ongoing wafer capacity limitations, especially within Intel’s 10nm and 7nm segments, as well as challenges related to a less advantageous product portfolio. Sur foresees Intel refining its server roadmap to enhance competitiveness with Advanced Micro Devices, Inc. (AMD). He highlighted that demand growth in Data Center and AI applications is expected to underpin revenue despite declines in the PC market segment.
On the trading floor on Tuesday, Intel’s shares recorded a modest increase of 0.45%, reaching $49.03 by the time of reporting. This price action reflects cautious optimism amid the backdrop of the company’s strategic initiatives and recent financial disclosures.
Overall, Intel’s partnership with SoftBank’s Saimemory, embodied in the Z-Angle Memory program, represents a forward-looking step to innovate within AI-related memory technology. While short-term financial indicators present challenges, this strategic collaboration aligns with Intel’s focus on addressing technological bottlenecks in memory supply and performance, pivotal areas given the expanding AI and HPC markets.
Key Points
Risks and Uncertainties
Disclosure
The ZAM initiative is built upon Intel's extensive expertise in memory design and development, including contributions from the U.S. Department of Energy’s Advanced Memory Technology program. This DOE program has significantly advanced the performance and power efficiency of next-generation dynamic random-access memory (DRAM) architectures intended for computers and server applications.
Addressing the rapid escalation in AI-driven demand for memory resources, the collaboration targets energy-efficient memory solutions that aim to alleviate existing supply limitations. Intel’s novel memory architecture combined with innovative assembly methodologies is focused on enhancing memory performance while simultaneously curbing energy consumption and production costs. This technological progression is anticipated to facilitate widespread adoption across the computing landscape throughout the next decade.
In parallel with this announcement, Intel recently released its fourth-quarter financial results, which reflected mixed outcomes. The company surpassed profit expectations but projected weaker revenue growth and flat earnings for the near term, highlighting ongoing complexities in its business turnaround. Challenges such as supply constraints and margin compression have contributed to an uncertain outlook and a consequential decline in Intel’s stock valuation.
For the fourth quarter, Intel reported revenue totalling $13.67 billion, slightly above the analyst consensus estimate of $13.37 billion. Adjusted earnings per share reached 15 cents, outperforming expectations of 8 cents per share. Nonetheless, revenue represented a 4% decrease year-over-year. Growth in Data Center and AI segments offered some offset against declines in the Client Computing Group.
Looking ahead to the first quarter, management forecasted revenue ranging from $11.7 billion to $12.7 billion, which falls short of the $12.49 billion consensus estimate. Adjusted earnings per share are projected to break even, a less robust performance compared to the modest profits anticipated by analysts.
Industry analysts offer insights on Intel’s current circumstances. Needham’s N. Quinn Bolton emphasized that supply bottlenecks, particularly impacting Intel’s 10-nanometer and 7-nanometer process technologies, continue to restrict shipment volumes. Bolton also noted that Intel expects adjusted gross margins to settle at approximately 34.5% at the midpoint, pressured by an unfavorable product mix.
From Benchmark, analyst Cody Acree described the stock pullback as a reaction to conservative corporate guidance despite strong quarterly results. Acree underlined that Intel is navigating a significant transition phase, marked by developments such as the anticipated 18-angstrom (18A) process node and the initial rollout of the Core Ultra Series 3 processor lineup.
JP Morgan’s Harlan Sur attributed the subdued guidance to ongoing wafer capacity limitations, especially within Intel’s 10nm and 7nm segments, as well as challenges related to a less advantageous product portfolio. Sur foresees Intel refining its server roadmap to enhance competitiveness with Advanced Micro Devices, Inc. (AMD). He highlighted that demand growth in Data Center and AI applications is expected to underpin revenue despite declines in the PC market segment.
On the trading floor on Tuesday, Intel’s shares recorded a modest increase of 0.45%, reaching $49.03 by the time of reporting. This price action reflects cautious optimism amid the backdrop of the company’s strategic initiatives and recent financial disclosures.
Overall, Intel’s partnership with SoftBank’s Saimemory, embodied in the Z-Angle Memory program, represents a forward-looking step to innovate within AI-related memory technology. While short-term financial indicators present challenges, this strategic collaboration aligns with Intel’s focus on addressing technological bottlenecks in memory supply and performance, pivotal areas given the expanding AI and HPC markets.
Key Points
- Intel and SoftBank’s Saimemory subsidiary have launched the Z-Angle Memory program to develop advanced AI-focused memory technology.
- Prototypes of the new memory technology are expected by 2027, with complete commercialization planned for 2030.
- Intel’s recent fourth-quarter earnings showed profitability above expectations but revealed declining revenue and cautious future guidance.
- Analysts cite supply constraints on Intel’s 10nm and 7nm process technologies as key factors influencing shipment volumes and margins.
Risks and Uncertainties
- Supply chain challenges related to Intel’s 10nm and 7nm wafer production may limit the company’s ability to meet market demand in the near term.
- The product mix’s unfavorable impact on gross margins could pressure profitability going forward.
- Revenue projections for the upcoming quarter fall below analyst consensus, reflecting uncertainty in growth prospects.
- Competition from AMD in server markets could intensify, requiring strategic adaptations in Intel’s roadmap.
Disclosure
This article provides an analysis of Intel’s recent corporate developments and financial results based on publicly available information as of the date of reporting. The content is for informational purposes and does not constitute investment advice.