Intel's revenue outlook deteriorates amid tariff uncertainties
- Intel's revenue forecast for Q2 is between $11.2 billion and $12.4 billion, below Wall Street estimates.
- Tariff-related uncertainties have caused fluctuations in customer behavior and revenue expectations.
- The ongoing trade tensions between the U.S. and China significantly affect Intel's sales outlook.
In the United States, Intel Corporation forecasted second-quarter revenue that falls below expectations set by Wall Street analysts. This announcement was made on Thursday, April 24, 2025, and it signals a potential setback under new CEO Lip-Bu Tan. Analysts had anticipated revenue around $12.82 billion, but Intel's projections are between $11.2 billion and $12.4 billion, leading to a significant drop in the company’s share price by 5.8% in extended trading. The outlook reflects ongoing concerns related to the effects of tariffs, particularly the impact of U.S.-China trade tensions on semiconductors. The company has acknowledged that recent customer behaviors were influenced by fears surrounding tariffs, leading to stockpiling of Intel chips in the first quarter. CFO David Zinsner indicated that while the first-quarter sales benefited from this strategy, the second quarter is expected to suffer as a result of those actions. The uncertainty regarding tariffs has made it difficult for Intel to gauge the potential impact on its revenue from China, which has historically been its largest market. Meanwhile, Tan is taking substantial steps to streamline the company, including reducing operational expenses and changing the internal structure to enhance efficiency. The modified operating expense target has been lowered from $17.5 billion for 2025 to about $17 billion, further aiming for $16 billion in 2026. Tan’s strategic focus includes cutting down on the internal bureaucracy that he believes hampers productivity and innovation. This approach may involve layoffs, with specific plans set to unfold during the second quarter alongside clarity on the impact these changes will have on employee numbers. The broader context of Intel's struggles lies in its challenging position within the semiconductor industry, which is foregrounded by the ongoing trade war between the United States and China. Despite President Donald Trump currently exempting chips from tariffs, retaliatory tax measures imposed by China on U.S. semiconductors loom large, leaving Intel's sales potential in that market shrouded in uncertainty. As the company continues to invest heavily into advanced semiconductor manufacturing, the financial ramifications of its shift toward becoming a contract manufacturer are significant and raise questions about its long-term strategy and viability in a rapidly changing market landscape.