Chipmaker Intel cuts dividend to lowest since 2007 to save cash

Intel, once the leading chipmaker, is now competing with rivals such as Taiwan Semiconductor Manufacturing Co Ltd over manufacturing technology, while looking to grow its foundry business at the expense of lower margins.

Chief Executive Pat Gelsinger said Intel will hold off on massive investments of tens of billions of dollars on new manufacturing equipment and facilities as it grows its foundry business.

“As macro conditions continue to deteriorate in the fourth quarter, our free cash flow has fallen below our guard band, and in this environment we simply conclude that the highest dividend payer is also the highest dividend payer,” he told analysts. Should not be a capital investor.”

The company, which reaffirmed its first-quarter forecast released in January, said it would cut the dividend by 50 cents per share annually, or $0.125 per share quarterly, a 66% decline from its previous payout.

Credit Suisse analyst Chris Casso said, “While painful, this was a necessary step to provide capital for their construction plan.”

Demand for Intel’s chips has cooled after two years of strong growth during pandemic-led remote working, prompting the chipmaker to warn in January that it would lose money in the first quarter.

Intel has committed to cutting costs by $3 billion this year, with a goal of saving between $8 and $10 billion by the end of 2025.

Gelsinger now expects net capex intensity, or the amount spent to generate a dollar in revenue, to be in the “low 30s” this year, compared to its prior expectation of 35%.

Shares of Intel, which have lost nearly half of their value last year, were up about 3% in early trading.

The text of this story is published from a wire agency feed without any modification.