Investments under scrutiny
Intel boarded up its wallet
2/22/2023, 7:07 p.m
The chip manufacturer Intel is pulling the emergency brake in view of the falling demand. Without customer commitments, no more investments are made in the factories. The dividend will be slashed. The employees also have to make compromises.
Due to uncertain business prospects, the US semiconductor group Intel is questioning its multi-billion dollar growth plans. “I’m not going to spend billions of dollars on chip fab equipment without clearer commitments from customers,” said company CEO Pat Gelsinger. At the same time, he announced a dividend cut. “As the economic environment continued to deteriorate in the fourth quarter, our free cash flow fell below our minimum threshold.”
The quarterly payout will be cut by about two-thirds to $0.125 per share. This is the lowest value in 16 years. “This was a painful but necessary step,” said Credit Suisse analyst Chris Caso. Intel shares then rose by a good three percent for a short time and were recently listed just below the red. Intel paid out $6 billion in dividends last year.
At the end of January, the semiconductor manufacturer warned of a slide into the red after disappointing quarterly results. Against this background, Intel wants to save up to ten billion dollars by 2025, three billion of them in this year alone. According to Gelsinger’s earlier statements, this also includes “personnel measures”, about the extent of which he has not given any information so far. The reduction in the remuneration of employees and managers is provisional, there were no further details at first. I
Among other things, Intel plans to build a chip factory in Magdeburg. According to a media report, the group is now demanding 10 billion euros in subsidies instead of the originally planned 6.8 billion euros due to increased prices. Federal Finance Minister Christian Lindner replied in a newspaper interview that the federal government was examining the framework conditions. At the same time, however, he emphasized that the state cannot be blackmailed.