Analysis: Intel's wave of optimism crashes amid lacklustre results 

Intel shareholders optimistic following a tumultuous period for the embattled chipmaker

Following poor results, Intel's share price fell by 13% in after-hours trading last week stalling hopes for a turnaround for the chipmaker. 

For the first time in many quarters, Intel shareholders were optimistic following a tumultuous period for the embattled chipmaker.

Betting on new chief executive Lip-Bu Tan, a US government stake in the business, and major investment from Nvidia and Softbank, shareholders believed that this month’s results would be the turnaround.

But struggles to meet soaring demand for server chips and a slower uptake of new customers saw the company’s revenue for the final quarter of last year fall by 4% year-on-year to $13.7bn (€11.7bn).

The company’s gross margin, its key measure of profitability — outlining the percentage of revenue after subtracting production costs — was 37.9% in the quarter on an adjusted basis.

For the current period, that key measure of profitability will contract to 34.5%, a far cry from when Intel was at its height, before missing out on the AI boom. Back then, margins regularly exceeded 60%.

Projections for its first quarter of 2026 fell well below estimates. Intel is forecasting revenue of $11.7bn (€9.96bn) and $12.7bn (€10.8bn), with the midpoint lower than the $12.6bn (€10.65bn) estimated by analysts.

Intel’s second-largest base in Ireland, the Leixlip campus, employs 4,900 people.

With its latest results meant to mark Intel’s turnaround, CEO Lip-Bu Tan suggests investors will have to wait a while longer. Picture: Intel/Bloomberg

That is after the chipmaker embarked on a global headcount reduction plan last year, to trim its workforce of 109,000 by 20%. In June, Intel confirmed it would cut 200 people from its Irish operations.

In the more than 35 years that it has been here, Intel has invested €30bn in its Irish operations — most of it in more recent times. In 2023, the chipmaker opened its €17bn Fab 34 facility, the largest construction project in Ireland, doubling the chipmaker’s manufacturing space in Leixlip.

Intel Ireland has been specialising in cutting-edge systems to produce wafers.

These are panels on which individual microprocessors are printed. The company is one of three with leading technology in this field, along with Samsung and Taiwan Semiconductor Manufacturing Company (TSMC).

The Irish plant produces the Intel 3 and Intel 4 processing systems, part of the so-called extreme ultraviolet (EUV) Node, which was developed in its Oregon facility in the US, but has been transferred to Ireland. This makes Leixlip the only Intel plant manufacturing such wafers in high volume.

According to Intel, EUVs play a “critical role” in its operations, helping the company achieve five nodes — Intel 7, Intel 4, Intel 3, Intel20A, and Intel18A — in four years. Just last week, Intel launched the first computer platform to be built on Intel 18A.

Intel’s lacklustre forecast was quickly reflected in its share price, which fell by 13% in after-hours trading.

With its latest results meant to mark the chipmaker’s turnaround, warnings from CEO Lip-Bu Tan suggest investors will have to wait a while longer.

Lip-Bu Tan said it would take “time and resolve” to turn around the company, and that the yield and production manufacturing were not up to his standards.

He was referring to the percentage of usable chips coming out of its factories, including in Leixlip, which is making it harder to fill orders.

Intel is struggling to keep pace with demand on both the server side and the PC side, with a shift towards production in favour of one market guaranteed to hurt the other.

Intel also runs the risk that higher prices for memory chips on the back of low supply will translate into more expensive laptops, potentially dampening demand.

Intel has been hoping it would turn a corner. With the benefit now of a 10% stake by the US government; a $5bn (€4.2bn) investment from the world’s largest chipmaker, Nvidia; and $2bn (€1.7bn) from Japanese conglomerate SoftBank, investors poured money into the stock on bets that Intel had everything it needed to deliver on its goals. The latest results show that it doesn’t.

In the meantime, lacklustre results mean even more uncertainty in the short-term for the embattled chipmaker.