Big Tech crash and Intel slump and job cuts

[joe sod]

There seems to be a crash happening now in big Tech stocks, Intel is getting hammered its stock price is down 37% in the last month alone. Its CEO said that this was down to a slump in earnings with its cost base too high, incredibly the main reason he said was down to the shift in chip manufacturing to ireland here is a quote from the business post
"Intel's decision to accelerate the shift of its manufacturing operations to Ireland was central to a slump in its quarterly profit margins, and will continue to weigh on its profitability in the coming months, the chip giant told investors last week."
incredible that this isn't getting more attention in the media given how important intel is to the whole high tech and multinational investment here. The rest of the article is behind a pay wall but it is very worrying that they are singling out shift to ireland manufacturing as reason for slump. Last year they stalled production over christmas period to save on sky high electricity costs. We know that ireland has the highest cost of electricity in Europe.
Also Colm Lucey pointed out that multinationals contribute 47% of our total tax take and we are incredibly exposed to a fall in tax revenues from multinationals

 

[jpd]

Our tax take is very exposed to large multinationals - this is not new and has been trumpeted for years now

 

[Wandering_Dazed]

Intel is getting hammered its stock price is down 37% in the last month alone. Its CEO said that this was down to a slump in earnings with its cost base too high, incredibly the main reason he said was down to the shift in chip manufacturing to ireland here is a quote from the business post
"Intel's decision to accelerate the shift of its manufacturing operations to Ireland was central to a slump in its quarterly profit margins, and will continue to weigh on its profitability in the coming months, the chip giant told investors last week."

Interesting that the blame is on their decision to invest in further Lab facilities in Ireland as the sole reason for Intels struggles. As usual when huge MNC's management make bad decisions it's the employees who pay the ultimate price.

Quite simply Intel has let it's competitors overtake them, manufacturing processes, low yield rate and markets demanding a return on AI investments are hurting them.

Intel's rough quarter was expected, but management's messaging struggles were not

Last week, we reported a slew of negative Intel news: CPU crashes affecting more chips than originally expected, a warranty extension to appease current owners of those...

www.techspot.com

Which is a bit ironic considering years back Intel (and Microsoft) had a monopoly on chips which AMD struggled to break. Intel took their eye off the ball and let others break into the mobile/IOT space.

 

[Brendan Burgess]

Folks

We do not speculate about share prices.

It is ok to talk about the implications of Intel's problems for the Irish economy.

Brendan

 

[clinteastwood]

There seems to be a crash happening now in big Tech stocks, Intel is getting hammered its stock price is down 37% in the last month alone. Its CEO said that this was down to a slump in earnings with its cost base too high, incredibly the main reason he said was down to the shift in chip manufacturing to ireland here is a quote from the business post
"Intel's decision to accelerate the shift of its manufacturing operations to Ireland was central to a slump in its quarterly profit margins, and will continue to weigh on its profitability in the coming months, the chip giant told investors last week."
incredible that this isn't getting more attention in the media given how important intel is to the whole high tech and multinational investment here. The rest of the article is behind a pay wall but it is very worrying that they are singling out shift to ireland manufacturing as reason for slump. Last year they stalled production over christmas period to save on sky high electricity costs. We know that ireland has the highest cost of electricity in Europe.
Also Colm Lucey pointed out that multinationals contribute 47% of our total tax take and we are incredibly exposed to a fall in tax revenues from multinationals

Presumably investing 20billion in leixlip did impact on the bottom line

 

[Towger]

There are also reports of issues with the current generation of processors, which may end up with an expensive recall.

 

[thedaddyman]

Intel missed the boat on AI and mobile chips and are now playing catch up. The nature of their business means it will take a number of years for that to happen.

 

[clinteastwood]

Unfortunately, the US lead in the chip making industry is no more. And sacking the r&d engineering experts and cutting capital investment wont change that.
It's TSMC and Samsung who are kings now with their customers Apple, Qualcomm and Nvidia.
Bad news for Ireland folks.

 

[joe sod]

Presumably investing 20billion in leixlip did impact on the bottom line

There were big problems in the construction aswell that to led delays and cost over runs along with the covid lockdowns and now most expensive electricity in Europe. I doubt if they had that decision again they would have built that fab34 in Ireland

 

[clinteastwood]

There were big problems in the construction aswell that to led delays and cost over runs along with the covid lockdowns and now most expensive electricity in Europe. I doubt if they had that decision again they would have built that fab34 in Ireland

I think you'll find the 12.5% corporation tax of profits out-weighs the relative small cost increase in labour, construction and electricity costs.
To put cost into context, each Intel fab would easily have 200 pieces of equipment (US made), which cost 5million each.

Vendor labour charges in 1995 was c.$100/hour - as an employee I only got 16k/annum of this.

TSMC have an equipment order which I have inside information, for 100Billion (yes, thats $100Billion) for 5 years with one leading chip equipment company.

Irish labour and elec costs are loose change!, they have invested c.30Billion , yes thats $30,000,000,000 since 1990 in Leixlip.

 

[Persius]

According to this poster over on boards, the quote in the OP is missing the second half:

Despite the hit Intel took from moving the manufacturing technologies to Ireland, Zinsner said the decision was a “good move”, telling analysts it had resulted in about $1 billion of capital savings.
“It’s a good move because it saves capital,” Zinsner added. “We don't have to spend capital twice essentially. And it starts to mature the Intel 4 and 3 processes in Ireland more quickly.”
The shift, he added, “will improve Intel 4 and 3 gross margin long term as we scale up the Ireland fab”.

 

[MrEarl]

Some of the big techs are rediculously overpriced, with too much hope value built in to their future potential (be it due to assumptions about AI, electric cars etc).

I actually think it's a variation of the DotCom Bubble, although granted, the big techs are mostly profitable -they are just at silly multiples.

As for Intel, it's clearly a big company in need of a radical overhaul. It benefits significantly from support from Western Governments, who want to see chips produced in Europe and the USA, but it desparately needs a new killer product, and to cut costs. I've a few shares in Intel, and hope they succeed, but I'm growing concerned that they've become the next IBM.....a company that struggled to please its shareholders, for many, many, years.

Hopefully, Intel will see better days, and the cuts needed, won't impact the Irish workforce, or related businesses, too severely.