At least, the company’s financial director is convinced of this.
Intel CFO David Zinsner attended the UBS conference, speaking with the host of the event on the important topic of increasing the profitability of the corporation’s business in the face of significant growth in the development of new technologies and the construction of new enterprises.
Image Source: Intel
As representatives of Intel have repeatedly noted, the company is going to build new enterprises with the active involvement of funds from both the state and various kinds of third-party investors. In fact, grandiose plans for the construction of new enterprises will require from the company not so much investment on their part. Zinsner confirmed in passing that the budget for the development of new technical processes will not be affected by cost control measures at all.
And yet, Intel’s profit margin in the coming years will be below the company’s usual 60%. David Zinsner explained how the manufacturer is going to bring it back to this level around 2026-2027. With mid-decade-leading manufacturing processes, Intel will not only be able to attract more customers to its contract services, but also increase its share of higher value-added products. The pricing policy of the company will become “more fair” for the company itself. For example, in the server and graphics segments, the profit margins of some Intel products are already well above 60%. In the future, their share can be increased, and new technical processes will increase the profitability of the business, although they will require high initial costs.
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In addition, the development of the contract business will allow Intel to load equipment more heavily and shorten its payback period. In turn, this will allow you to quickly switch to new technical processes without significant material losses. At least that’s what it sounds like from the mouth of the company’s financial director.