Intel tries to turn around the business of providing chips to data centres

Intel’s shares are down 44% in 2022, an even worse rout than the rest of the chip industry suffered this year. Picture: Intel Corporation

Intel, one of the largest private employers in Ireland, aims to turn around the once thriving businesses of providing chips to data centres.

The business of providing the microprocessors that run the internet and corporate networks had long been the crown jewel of what was the world’s largest chipmaker.

The company’s total dominance of the market, where components can sell for more than €10,000 each, helped bring in huge profits for California-based Intel.

However, data centre revenue dropped 16% last quarter from a year earlier, and the business’s operating margin collapsed to 5% from 38%. Intel missed its overall projections for the quarter and slashed its annual forecast.

“Of course, I knew that we had a number of execution issues which had been years in the making,” said Intel executive Sandra Rivera. “I probably under-called just how much work we had to do."

Rivals, such as Advanced Micro Devices and Nvidia, have been snatching away customers. Intel’s shares are down 44% in 2022, an even worse rout than the rest of the chip industry suffered this year.

The setbacks stem largely from past design choices, Rivera said. Intel was overly ambitious in trying to develop too many new technologies and features. That resulted in delays, preventing customers from receiving a product.

But Intel knows it has to fix more fundamental issues and win back the trust of its current customers, Rivera said.

The chipmaker’s share of the market for servers running on PC processors was 86% at the end of the second quarter.

• Bloomberg