Takes a big hit, announces cost-reduction plan, shares take a tumble

Intel has announced its second-quarter 2024 financial results, reporting a revenue of $12.8 billion, 38.7 percent gross margin, and EPS of $0.02. In the words of Pat Gelsinger, Intel CEO, these are disappointing quarter results, despite the fact that the company has "hit key product and process technology milestones."

In terms of numbers, Intel reported a revenue of $12.8 billion which is a 1 percent drop compared to the last year. Gross margin is reported at 35.4 percent, down by 0.4 percent, and net income or rather loss is reported at $1.6 billion, with earnings loss per share (GAAP) of 0.38. The non-GAAP gross margin is 38.7 percent, down by 1.1 percent and non-GAAP EPS is at $0.02, down by 0.11 compared to the last year. In the second quarter, the company generated $2.3 billion in cash from operations and paid dividends of $0.5 billion.

When it comes to specific business units, specifically the Intel Product group, the Client Computing Group reported a revenue of $7.4 billion, up by 9 percent compared to the last year, while Data Center and AI and Network and Edge, reported a revenue of $3 and $1.3 billion, a drop of 3 and 1 percent compared to the last year. The total Intel Products revenue adds up to $11.8 billion, which is up by 4 percent compared to the last year.

The Intel Foundry group reported a revenue of $4.3 billion, up by 4 percent compared to the last year.

Other business units, which report revenue in millions rather than billions, including Altera and Mobileye, reported a drop of 57 and 3 percent compared to the last year, with $361 and $440 million.

"Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation," said Pat Gelsinger, Intel CEO. "These actions, combined with the launch of Intel 18A next year to regain process technology leadership, will strengthen our position in the market, improve our profitability and create shareholder value."

"Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity," said David Zinsner, Intel CFO. "By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet. We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders."

In order to somehow ease up the hit, Intel has announced the new cost-reduction plan, which includes reducing operating expenses with some "meaningfully cut spending and headcount" by reducing its R&D and marketing, general and administrative spending by $20 billion in 2024 and $17.5 billion in 2025 and reducing workforce by more than 15 percent by the end of this year.

Intel also plans to reduce capital expenditures as it draws to the end of its five-nodes-in-four-years journey, which should reduce its gross capital expenditures next year. The company also means to reduce cost of sales next year, generating over $1 billion in savings, and it also means to maintain core investments to execute strategy. Intel will also suspend the dividend starting in the fourth quarter, recognizing the importance of prioritizing liquidity to support the investments needed to execute its strategy.

Intel was keen to note that the company is still on track and nearing completion of its promised five-nodes-in-four-years strategy, with Intel 18A on track to be manufacturing-ready by the end of this year and production wafer start volumes in the first half of 2025. The first two Intel products based on the 18A manufacturing process, Panther Lake for the client market and Clearwater Forest for the server market, are still on track for launch in 2025.

Intel also says that it has shipped more than 15 million AI PCs since December 2023, far more than all of Intel's competitors combined, and on track to ship more than 40 million AI PCs by year-end. Lunar Lake has achieved production release in July and should be shipping in the third quarter, promising to power over 80 new Copilot+ PCs across more than 20 OEMs.

Intel's Data Center and AI business group is betting big on its next-generation Intel Xeon 6 processors, including Sierra Forest with efficiency E-cores and Granite Rapids with P-cores, which should begin shipping in the third quarter of 2024. Of course, we expect Sierra Forest and some Granite Rapids SKUs while the rest should launch in early 2025. The same group is also on track to launch its Gaudi 3 AI accelerator in Q3 this year.

Intel expects revenue of $12.5 to $13.5 billion in Q3 2024, with a gross margin (GAAP) of 34.5 percent and earnings or loss per share of $0.24 (GAAP).

At the time of writing, Intel has taken a big hit with its shares dropping by over 20 percent after the financial report, and over 30 percent in the last year.

Intel's CEO Pat Gelsinger has sent a note to employees after the second-quarter 2024 financial report, promising to save $10 billion in the next year, as detailed earlier. Gelsinger notes that the current cost structure is not competitive, especially considering that the annual revenue of the company in 2020 was $24 billion higher than it was last year and the workforce was 10 percent smaller, stating that it is "not a sustainable path forward."

Gelsinger notes that the future path for the company will not be easy, but still believes that the IDM 2.0 strategy will eventually bear fruit and that the company needs to improve its execution, operate as a more agile company, and adapt to adapt to new market realities.

Nobody’s business but the Turks

Turkey's communications authority has blocked access to the social media platform Instagram, marking the latest instance of internet censorship in the country.

The Information and Communication Technologies Authority, responsible for regulating the internet, announced the block early on Friday without providing a reason.

However, the government-aligned Sabah newspaper reported that the block was in response to Instagram removing posts by Turkish users expressing condolences over the killing of Hama political leader Ismail Haniyeh.

This move follows criticism from Fahrettin Altun, the presidential communications director and aide to President Recep Tayyip Erdogan, who condemned the Meta-owned platform for preventing Turkish users from posting messages of condolence for Haniyeh.

Unlike its Western allies, Turkey does not classify Hamas as a terrorist organisation. President Erdogan, a vocal critic of Israel's military actions in Gaza, has described Hamas as "liberation fighters."

Friday has been declared a day of mourning for Haniyeh in Turkey, with flags being flown at half-mast.

Turkey has a history of censoring social media and websites. According to the Freedom of Expression Association, a non-profit organisation of lawyers and human rights activists, hundreds of thousands of domains have been blocked since 2022.

YouTube was also blocked in Turkey from 2007 to 2010.

Annual revenue growth to halve by 2029

The global gaming industry is projected to reach over 1.3 billion users this year, an increase of 91 million from 2023 and nearly double the figure reported in 2017.

According to numbers compiled by Stocklytics.com despite the growing number of gamers, spending on gaming equipment is on the decline and this is expected to continue in the coming years.

Stocklytics.com said the annual growth rate in the gaming equipment market is anticipated to halve, dropping to just 1.7 per cent by 2029.

Supply chain issues, global economic conditions, and a shift towards mobile and cloud gaming have significantly impacted the gaming equipment market in recent years, leading to fluctuations and slowdowns in revenue growth.

While the pandemic and the launch of new-generation VR headsets and consoles, such as the PlayStation 5 and Xbox Series X, caused a surge in global gaming equipment sales between 2020 and 2022, the market is now cooling down, with growth rates far below those seen in previous years.

A Statista Market Insight survey revealed that global gaming equipment sales experienced double-digit growth between 2019 and 2022, with an average annual increase of 15 per cent.

The years 2020 and 2021 were particularly strong for gaming consoles and VR headsets, with revenues rising by 23 per cent and nearly 17 per cent, respectively. However, growth has since slowed dramatically.

After falling to five per cent in 2023, the annual growth rate in the gaming equipment segment is forecasted to drop to 3.6 per cent in 2024, a sixfold decrease since 2021. This downward trend is expected to continue, with Statista predicting the annual growth rate will fall to just 1.7 per cent by 2029. This modest growth will result in a market revenue increase of only 11 per cent, or $4 billion, over the next five years, compared to an 88 per cent increase in the past six years.

Statista data indicates that China, the world's largest gaming market, will see the most significant decrease in gaming equipment spending.

In 2024, Chinese consumers are expected to spend around $4 billion on gaming consoles and VR headsets, a 10.2 per cent increase from last year. By 2029, market revenue will rise slightly to over $4 billion, but the annual growth rate will plummet 34 times to just 0.3 per cent.

Americans are bigger spenders on gaming equipment. By 2029, US gaming equipment revenue is projected to rise from $9.7 billion to $10.9 billion, with the market growth rate doubling to 1.8 per cent.

Japan is also facing a slowdown, with gaming equipment sales expected to increase by only $100 million over the next five years, while the growth rate will drop from 3.8 per cent to 0.7 per cent.

When analysed by device type, VR headsets are facing a more severe decline than gaming consoles, with their annual revenue growth rate expected to drop fivefold to 1.6 per cent by 2029. The growth rate for gaming consoles is expected to remain flat at 1.8 per cent.

Just in case your chips are permanently damaged

Intel has announced an extension to the warranty periods of its 14th and 13th Generation CPUs by an additional two years.

This means that if you had bought one of these chips the warranty period will be five years.

This move comes in response to persistent instability issues affecting these processors. Despite efforts to address the problems through various updates, including BIOS fixes and patches, Intel has acknowledged that there is no permanent solution for chips already degraded by elevated voltages.

The company has ruled out a recall of the affected CPUs and will continue sales, but it has committed to providing enhanced support to customers experiencing instability.

In an official statement, Intel assured customers that those affected by the instability issues would be offered replacement chips.

The company is set to provide more details on the extended warranty support for its boxed Intel Core 13th and 14th Gen desktop processors in the coming days.

The extension covers all boxed CPUs, including those rated at 65W and above TDPs, which are among the affected parts.

The instability issues have led to a class-action lawsuit and have shaken trust among Intel's customers and partners.

Reports suggest that there may be a marketing shift towards AMD and its Ryzen CPUs, potentially impacting the sales of Intel's current and upcoming processors, including the Intel Core Ultra 200 "Arrow Lake" desktop parts expected in Q4 2024.

Intel has apologised for the delay in communications and assured customers of its commitment to resolving the issues. Customers experiencing instability symptoms are advised to contact their system manufacturer's support team or Intel Customer Support for assistance.

Look at my tarot cards

Argentina's security forces have announced a controversial plan to use artificial intelligence to "predict future crimes," a move that experts warn could infringe on citizens' rights.

This week, the country's far-right president, Javier Milei, established the Artificial Intelligence Applied to Security Unit. According to the legislation, this unit will employ machine-learning algorithms to analyse historical crime data and predict future offences.

Additionally, it will use facial recognition software to identify "wanted persons," monitor social media, and analyse real-time security camera footage for suspicious activities.

The Ministry of Security claims the new unit will help "detect potential threats, identify movements of criminal groups, or anticipate disturbances." However, this Minority Report-esque initiative has alarmed human rights organisations.

Experts are concerned that the technology could disproportionately target certain societal groups and have raised questions about who will have access to the information and how it will be used.

Amnesty International Argentina’s Mariela Belski has warned that the move could infringe on human rights.

"Large-scale surveillance affects freedom of expression because it encourages people to self-censor or refrain from sharing their ideas or criticisms if they suspect that everything they comment on, post, or publish is being monitored by security forces," he said.

The Argentine Centre for Studies on Freedom of Expression and Access to Information noted that such technologies have historically been used to "profile academics, journalists, politicians, and activists," posing a threat to privacy without proper oversight.

Milei, a far-right libertarian who rose to power late last year, has promised a tough stance on crime. His security minister, Patricia Bullrich, reportedly aims to replicate El Salvador's controversial prison model, and the administration is moving towards militarising security policy, according to the Center for Legal and Social Studies.

The government has also cracked down on protests, with riot police recently using tear gas and rubber bullets on demonstrators and officials threatening to sanction parents who bring children to marches.

The latest measure has sparked a particularly strong reaction in a country with a dark history of state repression. During Argentina's brutal 1976-83 dictatorship, an estimated 30,000 people were forcibly disappeared, some thrown alive from planes on so-called "death flights." Thousands were tortured, and hundreds of children were kidnapped.

A Ministry of Security source stated that the new unit will operate within the current legislative framework, including the Personal Information Protection Act. The unit will focus on applying AI, data analytics, and machine learning to identify criminal patterns and trends in the ministry's security databases.

Too much power over AI

US Senators, including Elizabeth Warren, are urging the Department of Justice to investigate Nvidia for potential antitrust violations due to its dominant position in the AI chip market.

The senators argue that Nvidia's practice of bundling software and hardware stifles innovation and locks in customers.

Demand Progress, along with nine other groups, has written to the Department of Justice's antitrust chief, Jonathan Kanter, calling for a probe into Nvidia's business practices.

Nvidia's market value soared to $3 trillion this summer, driven by demand for chips capable of running complex generative AI models.

The groups, which advocate against monopolies and for government oversight of tech companies, have criticised Nvidia's bundling practices, which have also drawn the attention of French antitrust authorities.

"This aggressively proprietary approach, which is strongly contrary to industry norms about collaboration and interoperability, acts to lock in customers and stifles innovation," the groups stated.

Nvidia controls approximately 80 per cent of the AI chip market, including custom AI processors made by cloud computing giants like Google, Microsoft, and Amazon. These chips are typically rented through each platform rather than sold directly.

A spokesperson for Nvidia responded, "Regulators need not be concerned, as we scrupulously adhere to all laws and ensure that Nvidia is openly available in every cloud and on-premises for every enterprise. We will continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need."

As boss cleans his new classic cars

Destiny developer Bungie has announced it is letting go of 220 employees, or 17 per cent of its workforce.

 CEO Pete Parsons (pictured) attributed the layoffs to "financial challenges," a move that has sparked controversy, especially after it was revealed he may have spent over $2.4 million on classic cars following Sony's acquisition of the company and continued  these purchases even after previous layoffs.

Bungie has cited "rising costs of development and industry shifts as well as enduring economic conditions" as reasons for the job cuts.

The Sony subsidiary stated it needs to make significant changes to its cost structure and focus development efforts entirely on Destiny and Marathon. The layoffs will affect all levels of the company, including executives and senior leaders—though not Parsons he will presumably be working on the Chrome.

To reduce the number of layoffs, Bungie is transferring 155 employees to Sony Interactive Entertainment over the next few quarters. Additionally, a team working on one of Bungie's incubation projects—an action game set in a new science-fantasy universe—will be spun off to form a new studio within PlayStation Studios.

Bungie technical UX designer Ash Duong said:"This is hitting people who were told they were valued. That they were important. That they were critical to business success. But none of that mattered.”

Many have called for Parsons to resign. The calls intensified when he set his X account to private, but he soon made it public again, realising it was exacerbating the situation.

Further anger was sparked by the discovery of what appears to be Parsons' account on a car bidding site called Bring a Trailer, showing he has spent $2.4 million on classic cars since September 2022, including $500,000 since the October layoffs.

Employers can spy on staff

Microsoft Dynamics 365's "field service management" tools have been accused of allowing employers to monitor mobile workers via smartphone apps, reportedly to the detriment of their autonomy and dignity.

A probe by Cracked Labs, an Austrian nonprofit research group, suggests that the software is part of a broader set of applications that disempower workers through algorithmic management.

The case study summarises how employers in Europe use software and smartphone apps to oversee field technicians, home workers, and cleaning staff.

This is part of a larger ongoing project called "Surveillance and Digital Control at Work," which includes contributions from AlgorithmWatch, Professor Jeremias Adams-Prassl from the University of Oxford, and trade unions UNI Europa and GPA.

The study notes that mobile maintenance workers used to have significant autonomy when equipped with basic mobile phones. However, smartphones now allow employers to track what mobile workers do, when they do it, where they are, and gather many other data points.

This monitoring, the report argues, diminishes worker discretion, autonomy, and sense of purpose due to task-based micromanagement. The shift has also increased work stress, with little regard for workers' capabilities, lifestyle differences, and job practices.

A Volish spokesperson said: "Field service workers travel to multiple locations servicing different products every day. Dynamics 365 Field Service and its Copilot capabilities are designed to help field service workers schedule, plan, and provide onsite maintenance and repairs in the right location, on time, with the right information and workplace guides on their device to complete their jobs."

They added: "Dynamics 365 Field Service does not use AI to recommend individual workers for specific jobs based on previous performance. Dynamics 365 Field Service was developed under our Responsible AI principles and data privacy statement. Customers are solely responsible for using Dynamics 365 Field Service in compliance with all applicable laws, including laws relating to accessing individual employee analytics and monitoring."

Switch between 4K at 240Hz and 1080p at 480Hz

ASUS Republic of Gamers (ROG) has announced the availability of its ROG Swift OLED PG32UCDP gaming monitor, a 32-inch dual-mode monitor that allows users to easily switch between 4K at 240Hz and 1080p at 480Hz, depending on the game they are playing.

The ROG Swift OLED PG32UCDP uses a third-generation ROG OLED and Micro Lens Array Plus (MLA+) technologies panel, that promises 15% more brightness while the rest of the specifications include VESA DisplayHDR 400 compliance with 1,300cd/m² brightness, contrast ratio of 1,500,000:1 and 0.03ms GTG response time. The native resolution is 3840x2160 4K but it can switch between 4K at 240 Hz / FHD at 480 Hz with Dual Mode option with Frame Rate Boost.

It also supports Adaptive Sync, G-SYNC compatible, and FreeSync Premium Pro, has ASUSS OLED Care, and features two HDMI (v2.1), one DisplayPort (v1.4) with DSC inputs as well as three USB 3.2 Gen 1 Type-A, and one USB-C ports. The stand supports swivel, tilt, and height adjustments and it supports VESA mount (100x100).

The ASUS ROG Swift OLED PG32UCDP is now available in the US at an MSRP of $1,299.

50MP front camera and 50W charging

Nothing has officially launched its new Phone (2a) Plus, an updated version of the original Phone (2a) launched back in March, which gets the new Dimensity 7350 Pro SoC, 50MP front camera, new color options, and a few other updates.

Desing-wise, the Nothing Phone (2a) Plus is pretty much the same as the original non-Plus version, and the only updates are the two new updated color options, Black and Grey, and the new Glyph system. It has the same dimensions, the same glass front with Gorilla Glass 5, and the same plastic back with a plastic frame. It also still uses the same "flexible" 6.7-inch AMOLED screen with 2412x1084 resolution (395PPI), 120Hz adaptive refresh rate, 1,300nits of peak brightness, and 1m:1 contrast ratio.

Nothing updated the Glyphs as well, giving it 26 LED lights, as opposed to just 3 on the original one. The rear camera system is also the same, as it gets two 50MP sensors, one behind an f/1.9 24mm wide lens with PDAF and OIS, and one behind an f/2.2 ultrawide lens. The front camera has been updated to a 50MP sensor behind the same f/2.2 lens.

The biggest update is the new 4nm Mediatek Dimensity 7350 Pro SoC, which is an octa-core SoC with two Cortex-A715 and six Cortex-A510 cores and Mali-G610 MC4 GPU. While it looks the same as the original Dimensity 7200 Pro SoC, it has higher clocks all across the board, and you can expect up to 10 percent faster CPU performance and up to 30 percent faster GPU performance, according to Nothing. Nothing is pairing it up with 256GB of storage, and 12GB of RAM with 8GB of "RAM Booster".

The battery is still 5,000mAh, but it gets faster 50W charging. It will run on Nothing OS 2.6 based on Android 14, and gets ChatGPT integration as well as the new News Reporter Widget with the voice of Nothing's CFO Tim Holbrow.

The Nothing Phone (2a) Plus starts at $399/£399.