Intel's Q2 2025 earnings report: Profit slumps, revenue surprises, and new CEO caught in a bind

 

As was the case in the first quarter of this year, Intel may also have benefited from a release of demand in the second quarter, as customers sought to place orders ahead of the implementation of specific tariffs on the semiconductor industry.

Intel (INTC) Q2 2025 Financial Results

In the three months ending June 30, Intel reported non-GAAP revenue of $12.859 billion, exceeding the market consensus estimate of $11.87 billion.

For the quarter, Intel's total product revenue was $11.81 billion. Of this, foundry revenue reached $4.417 billion in the second quarter. The consensus forecast data in the chart above is sourced from here. Additionally, please note that the “Other” revenue category for the second quarter of 2024 also includes revenue from Intel's Network and Edge Business Division, which has recently been discontinued.

Intel reported a non-GAAP gross margin of 29.7% for the quarter, below the company's own forecast of 36.5%.

Finally, Intel's earnings per share (non-GAAP) were -$0.10, below the market's consensus estimate of $0.01.

Below is the company's guidance for the third quarter of 2025.

Intel currently expects third-quarter revenue of $13.1 billion (based on the midpoint of the given range), representing a sequential increase of 1.87%.

Additionally, Intel will lay off 15% of its workforce, with the company's total headcount standing at 99,500 as of the end of 2024. Notably, Intel laid off 15,000 employees in 2023 and another 15,000 in 2024. Additionally, Intel will close factories in Germany and Poland.

Investors reacted positively to Intel's latest earnings report, with the stock currently up approximately 3% in after-hours trading.

Of course, analysts and investors will closely monitor Intel's upcoming earnings conference call to gauge whether the company is leaning toward prioritizing the development of its next-generation 14A process over the current-generation 18A process. The 18A process is largely compatible with TSMC's next-generation 2nm node process. Reuters reported that Intel is planning such a shift.

If Intel ultimately decides to prioritize the development of the 14A process, it will have to incur significant asset impairment losses related to the 18A process, potentially amounting to billions of dollars. Even so, Intel's CEO faces immense pressure to chart a viable path toward sustainable profitability for the company.

Meanwhile, as we recently noted, KeyBanc now estimates that Intel's 18A process yield has reached 55%, a 5% increase from the previous quarter, and is now approaching the yield of TSMC's custom 2nm process.

Nevertheless, Intel's new CEO, Lip-Bu Tan, now finds himself in a “dilemma.” TSMC is the ideal foundry partner for Intel's product division, but if Intel were to abandon its foundry business, it would immediately face the issue of billions of dollars in fixed costs that cannot be covered, as these costs require a significant volume of orders from the chip manufacturer's product division to be spread out.