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Intel delays key Xeon data center processor amid massive losses — Clearwater Forest pushed back to 1H 2026
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Intel’s market cap plummets to 16-year low as stock rout continues
Perhaps the most alarming sign is that Intel’s Client Computing Group (CCG) revenues fell 8% year-over-year to $7.6 billion. This drop was attributed to weaker-than-expected PC demand, particularly in the consumer segment, competitive pricing, and unfavorable product mix that includes a plethora of products made by TSMC. Interestingly, many of Intel’s customers favored older-generation products like Raptor Lake over newer, higher-cost platforms such as Meteor Lake, Arrow Lake, and Lunar Lake.
Despite these challenges, Intel noted demand for AI PCs from business customers, as well as enterprise fleet upgrades and Windows 10 end-of-service migrations, although this was insufficient to offset the broader softness in consumer sales.
Intel’s Data Center and AI (DCAI) business unit reported $4.1 billion in revenue in Q1 2025, achieving an 8% year-over-year increase, making it one of the few growth areas for the company. The performance was primarily driven by strong demand from hyperscalers for host CPUs in AI server deployments. However, the segment faced margin pressure due to competitive dynamics from AMD, product mix, and elevated demand for older-generation parts rather than newer offerings.
Despite the revenue growth, Intel acknowledged macroeconomic uncertainty, potential spending pullbacks, and competition from AMD and Arm-based server solutions as risks that could affect DCAI performance in the coming quarters. The company remains focused on stabilizing market segment share and increasing average selling prices (ASPs) while preparing for the ramp of its next-generation server products.
Intel Foundry reported $4.7 billion in revenue, reflecting a 7% year-over-year increase driven mostly by internal demand, particularly from Intel’s own product groups for wafers and advanced packaging services. Despite revenue growth, the Foundry segment continued to operate at a significant loss, posting an operating loss of $2.3 billion, which remained roughly flat compared to the previous quarter.
Intel’s Lip-Bu Tan reiterated at the conference call that the company’s Foundry success hinges not just on manufacturing capabilities but also on building customer trust, improving process design enablement, and supporting a broader range of customer flows. For now, the key mission of Intel Foundry is to ramp up production of Intel 18A-based Panther Lake and then Clearwater Forest processors in late 2025 – 2026 to prove that IF has a node that is competitive with TSMC’s N2.
Intel’s non-core businesses — such as Altera (FPGA business), Mobileye (computer vision for the automotive industry), IMS (multi e-beam photomask writing tools), and others — generated $943 million in revenue, marking a substantial 47% year-over-year increase. The group achieved $103 million in operating profit, a notable improvement compared to a $170 million loss in the same period last year.
For Q2 2025, Intel expects revenue between $11.2 billion and $12.4 billion, representing a potential 2% to 12% sequential decline from the first quarter and about a billion decline YoY, with gross margins forecasted at 34.3% due to product mix and Intel 18A startup costs. The wide guidance range indicates significant uncertainty due to macroeconomic risks as well as potential tariff impacts.
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