(Reuters) -Intel forecast second-quarter revenue below Wall Street estimates on Thursday, casting a shadow over new CEO Lip-Bu Tan’s first round of earnings at the helm, against the backdrop of a raging Sino-U.S. trade war.
The dour outlook from Intel could be another source of pessimism for investors who are counting on Tan to turn the chipmaker around after years of missteps have left it struggling to gain a foothold in the booming AI market.
The Santa Clara, California-based company expects revenue of $11.2 billion to $12.4 billion for the June quarter, compared with analysts’ average estimate of $12.82 billion, according to data compiled by LSEG.
“The current macro environment is creating elevated uncertainty across the industry, which is reflected in our outlook,” CFO David Zinsner said in a statement.
Amid Tan’s attempts to streamline the company and cut costs, Intel also said it is reducing its adjusted operating expense target to approximately $17 billion in 2025, down from its previously stated goal of $17.5 billion, and is now targeting $16 billion in 2026.
The company also reduced its gross capital expenditures target to $18 billion for 2025, down from the company’s previous target of $20 billion.
“Intel is taking actions to drive better, more efficient execution across the business. The plan includes streamlining the organization, eliminating management layers,” the company said in a statement.
While U.S. President Donald Trump has for now spared chips from tariffs, Beijing’s high retaliatory levies on U.S.-made semiconductors cloud the outlook for Intel’s sales to China, typically its largest market.
Chips manufactured in the U.S. are set to face levies of 85% or higher, based on the state-backed China Semiconductor Industry Association’s notice earlier in April.
China imports $10 billion worth of chips from the United States annually. About $8 billion of these are central processing units (CPUs) assembled by Intel in the U.S., according to Bernstein analysts.
Intel’s first-quarter revenue was flat at $12.67 billion. The results beat estimates of $12.30 billion.
The company expects second-quarter per-share adjusted profit to break even, compared with estimates of profit of 6 cents per share.
Intel’s drive to become a contract manufacturer of chips, a strategy championed by Tan’s predecessor, Pat Gelsinger, has strained the company’s finances as it pours billions of dollars into setting up advanced manufacturing facilities.
(Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney and Stephen Nellis in San FranciscoEditing by Peter Henderson and Matthew Lewis)
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