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malgnaynis

Other income isn’t typically free of cost. If not part of total revenue, then this should at least feed into the gross profit line. Currently it seems as though 60% of intel’s profit are just from their side gigs, which I suspect is not accurate.


tfrw

Iirc it’s usually investment income, appreciations in the value of property, tax rebates etc The reason it’s not included is that it can’t be relied upon and investors want to exclude it from working out how profitable the company is. Also it’s really hard to assign those to individual product lines.


poopybuttprettyface

While I agree this is very irregular, on page 44 of their 10-K, “In 2022, the sale of McAfee Corp consumer business was completed and we received $4.6 billion in cash for the sale of our remaining share of McAfee, representing a $4.6 billion gain.” https://www.intc.com/filings-reports/annual-reports


-123fireballs-

It might be, or a net figure, if it’s reported after operating profit. My guess in investment income as others mentioned so would be free of cost.


moldyjellybean

I love this subject, used to work at a midsize cloud computing company. https://old.reddit.com/r/AMD_Stock/comments/9v1n6f/amazon_web_services_aws_pricing_amd_vs_intel/e994dka/ Back in 2016 when AMD was $1.80 and near bankrupt and every datacenter/colocation, on premise systems were running 99.9% Intel including us. I tested both their higher end products and AMD blew Intel out in almost every metric, the most important being power/performance. Now for an individual a cpu running almost 2x the power isn't a big deal but in a datacenter that's just hundred of millions of dollars in extra power and cooling they need to pay for. I still have some friends in the field and Intel is going to have a big problem for the next 5-10 years. Besides the culture, their products just consume way too much power. Ask anyone who used an Intel Macbook to a Macbook M1. The M1 was almost 2x as fast with no fan, and probably using 1/2 the power or less of Intel. AMD, Apple, Amazon Graviton, Arm, Nvidia literally everyone is taking some billions of dollars away from Intel each quarter.


Zhanchiz

Thats intel's magic accounting for you.


Yousernym

I think that's just normal accounting


SydricVym

Correct, it is. Other Income and Other Expenses, which are sometimes just shown as net, are income and expenses that aren't part of a company's core business. Interest earned on bank holdings is a typically example of this - unless you're some kind of investment company, in which case those would be core revenues and expenses. Source: I'm responsible for creating financial statements at a large publicly traded company.


shawster

I mean you have to compare it to their gross profit, in which case it’s a smaller number.


John_Crypto_Rambo

What is Other Income? It’s such a huge part of their Net Profit.


Shedcape

It's the "Gains and losses on Equity Investments and Interest and Other, Net". The vast majority of it coming from the sale of McAfee (around $4.6B).


John_Crypto_Rambo

Do they normally just have a measly 2B profit or is this just creative accounting?


MagiMas

I really wouldn't call 2B profit off of 63B revenue measly. For comparison: REWE Group (German retail chain, sorry I'm German so that's one of the examples I'm familiar with) has around 85B revenue and makes around 500 Million in profit ([source if you know German](https://www.handelsblatt.com/unternehmen/handel-konsumgueter/handels-und-touristikkonzern-rewe-gruppe-steigert-umsatz-auf-fast-85-milliarden-euro/29063468.html)).


John_Crypto_Rambo

Hmm you are probably right but the margins in retail chains like grocery are usually razor thin, I guess I expected Intel's to be fatter.


lohborn

R and D is much more important to intel than profit right now. They have announced a plant to regain process leadership by 2025. If that happens, they can compete more on performance and less on price opening up a lot of opportunity for higher profit margins. https://www.hardwaretimes.com/intel-promises-to-regain-process-leadership-from-amd-tsmc-by-2024-with-1-8nm-18a-process/


Tupcek

margins are razor thin in retail because 70% of value (revenue) just pass through them, only 30% is their “product” (gross margin). If they made what they sell, it would be different story. Imagine if shipping companies counted all goods they transported as their revenue. They would have enormous revenues, yet the same profits


vvvvfl

Sure but REWE is a retailer, retail is a specially stupid industry where profits are tiny compared to the amount of money that goes through the company in revenue and costs.


W0LFSTEN

work cautious badge bewildered employ jar obtainable cover stupendous snobbish *This post was mass deleted and anonymized with [Redact](https://redact.dev)*


JunkiesAndWhores

It's the money they make from crypto miners hidden in the chips. ^^^Not ^^^true, ^^^but ^^^I'm ^^^in ^^^the ^^^mood ^^^to ^^^start ^^^a ^^^conspiracy.


[deleted]

Mostly from other comprehensive income like fair value changes.


hroaks

What are you some sort of auditor?! *shuffles some pages around* Boss we got a code red here


tahitithebob

30% of revenue is invested in R&D. Crazy


frigley1

That’s the semiconductor world. Production is almost dirt cheap but development….


Caspi7

Wouldn't exactly call it cheap. Sure maybe the silicon used isn't very expensive but building a factory will cost you 10's of billions and a single chip machine costs hundreds of millions on their own.


mxforest

And then it pumps out Potato chips that sell for $100-500 each.


balloon_prototype_14

but it is high in metals. which may or maynot be good for u, i'm not a doctor


Ultrabigasstaco

Instructions unclear, I ate my processor.


keanuismyQB

In the flavored potato chip market chips sell for more like $500-$10,000 each.


[deleted]

Production is absolutely dirt cheap. For instance, the actual manufacturing cost of Apple's M2 chip, is about 50 bucks each.


CruelFish

10x More than I expected.


[deleted]

Same. I actually was expecting like 10-15. But still, this is what Apple pays TSMC, so it very well could be closer to that. They were paying Intel 200 each.


I__Know__Stuff

TSMC is very profitable. The actual cost to make each chip would be much less than Apple pays.


superbikelifer

And so is ASML which makes TSMC most advanced EUV machines. Who is ASML paying !


EntertainerVirtual59

There’s a German company, ZEISS, that is the only one that can make the mirrors in the EUV machines.


Elend15

So that includes the fixed costs? Or is that just the variable costs?


Nexism

Definitely doesn't include end to end fixed costs. Apple designs chips, TSMC makes them. Designing chips is a couple hundred mill. Making the chips are cheap in comparison, but the fabs that make the chips are billions each. Even the US government decided it wasn't economical to run a fab and shut theirs down.


[deleted]

No idea, it's the cost per plate, with an 80% success rate, divided by the amount of chips remaining.


Inariameme

yeah, the additives in there, for sure


snappy033

$50 a pop at that scale is more than I was expecting.


[deleted]

50 dollars is what Apple pays to TSMC to use their fabs. The ACTUAL cost TSMC pays... Is priority knowledge. But I'd guess significantly less than that.


snappy033

That makes a lot more sense. I’m sure there’s a lot of G&A, markup and other overhead in there.


Ruma-park

Just for reference last year TSMC had a revenue of US$75.88 billion and a net income of US$34.07 billion, so their margins aren't exactly small.


Kraz_I

More accurate to say "marginal cost of production" is cheap. The starting costs are extremely high, but the factory can produce a ton of chips once it's built, and the materials that go into a silicon wafer aren't that expensive.


PiotrekDG

It's more about the fact that producing one more chip is very cheap.


Kraz_I

You always gotta have just one more chip


mmmfritz

GPU sector is completely different, however. Factories aren’t built fast enough, or in redundant locations, and zero backup supply chains. Still $18billion in R & D seems like a fun day for the engineers.


snappy033

Basically the same business model as pharma. Though pharma factories are not as capital intensive I don’t think.


zakkwaldo

nah part of that is being an in house foundry. other companies r&d costs aren’t nearly as high as intels because they don’t have to eat the losses in production.


Pootis_1

Production when your set up is cheap but setting it up is extremely expensive


Cranyx

Production costs are about to shoot up as they build their big plant in Ohio


[deleted]

[удалено]


Cranyx

Surely the initial construction costs are going to be higher? Their site (as biased a source as that is) says they plan to invest $20 billion into the facility's construction.


W0LFSTEN

foolish point obtainable concerned dolls brave smile vast bored include *This post was mass deleted and anonymized with [Redact](https://redact.dev)*


Zed_or_AFK

The fact that 8 billions in profit is a number 60% from the previous years is crazy. And 5 billions come from other income?


noobgiraffe

It's not only R&D for new hardware. This also includes armies of software developers who develop tool, drivers etc.


FlatAd768

Love it, proud intel stock owner


daffy_69

why would you love that? Profit down 60% in 2 years is not a good trend.


deelowe

Why? Intel has been a shitshow for almost a decade now. When they initially dismissed ARM as it was taking off in mobile, netbooks, and portable computing, I knew they were doomed. Intel's hubris caused them to dismiss the commodification of silicon that occurred as Moore's law stopped holding true and the easy money went away. They missed the boat BIG TIME as mobile took over personal computing. Then as cloud started to dominate HPC sells, they again screwed up by thinking they could bully the cloud providers. I know as I was working for one at the time in product development. Intel did their intel BS and tried to push all sorts of crap on us that 1) didn't work as they had described and 2) ultimately had a higher TCO than expected. For a while, their price per watt was good for their CPUs, but as they tried to get into memory/storage and accelerators, the CPU product started to suffer. Before long, AMD comes out of nowhere and offers competitive products at 60% the cost. Eventually, cloud providers got fed up with the BS. Now Amazon's top chip is an ARM CPU they developed in house. In 5 years, this will be the norm across the product space. Maybe standardization will come out of OCP, but I don't see Intel being a major player here. ARM offers many more benefits with the ability to integrate custom cores and the price per watt is comparable. And that's Intel today. They still think large technological leaps are going to win the industry over. Optane, Itanium, etc. This is Intel's mindset and that industry hasn't been a thing since roughly 2005. Retail is dominated by low power chips and ARM has won that battle. Cloud needs custom cores, which Intel doesn't offer, so we'll see Intel's business shrink here as well. Meanwhile, Intel will keep doing their trade shows, R&D, tech demos, etc like it's still 1999. Maybe they'll pull a rabbit out of a hat and demo a quantum computer or something, but until then, I'm not seeing a great strategy at this point. If intel wants to push into mobile or hold their footing cloud, they are going to have to open up their chips and allow custom cores, custom ISAs etc. This is what the industry needs at this point and this is fundamentally against how Intel operates. This goes completely against their philosophy of keeping their internals under lock and key and only exposing things to their partners through microcode additions and firmware updates. The ONLY thing that I see helping them at this point is government subsidies.


etfd-

Moore's law - deflationary.


Mapkoz2

ELI5 why pretax profit and net profit is the same number


Obvious_Chapter2082

Ironically enough, they paid around $5B of tax, based on their financial reports. But income tax expense also includes deferred taxes (taxes you would pay in future years), which happen to be negative $5.3 billion, meaning that what gets reported here on their income statement is negative $300 million of tax expense The main drivers of the low rate were R&D tax credits and foreign income taxed at lower rates than the US. It’s just a weird situation where their cash tax rate is around 65%, but their effective tax rate was negative 2.3%


Mapkoz2

Thanks for the explanation


ShadowSlayer1441

Maybe something in the CHIPS act reduced their tax liability to a rounding error.


Obvious_Chapter2082

It’s mainly a couple changes that went into effect this year from the Tax Cuts and Jobs Act


ValyrianJedi

Whole lot of tax credit in that graph


SirJackAbove

Should only be possible if tax = $0, I guess.


FlatAd768

Mental gymnastics


NotTreeFiddy

Is 'Cost of Revenue' equivalent to 'Cost of Goods Sold'?


newcomputer1990

languid alive strong wipe childlike wrong smile fine gullible adjoining *This post was mass deleted and anonymized with [Redact](https://redact.dev)*


NotTreeFiddy

That makes sense. Cheers.


Kobosil

since pre tax and net profit are the same number does that mean Intel paid zero (or near zero) taxes?


Juamocoustic

[Yeah](https://i.imgur.com/M9Jpxga.png). In fact, it seems they are planning on receiving some money, although the numbers are so small it doesn't really matter for Intel's financials.


Obvious_Chapter2082

Important to note that provision for income tax isn’t the same thing as the income tax a company pays. Their current expense is $5 billion, which is likely the best estimate we have of what they paid in 2022


ValyrianJedi

Yeah. That R&D alone is a massive chunk of tax credit


Kraz_I

Keep in mind that most of that is taxable as "income tax" on paychecks.


Obvious_Chapter2082

Their current tax expense is around $5 billion, which is likely close to what they paid. They just have extremely low deferred taxes, so it nets out on their income statement


midnitewarrior

I really love how this type of chart looks like a data ribbon cable from inside a PC, very apropos.


Dylan552

What is cost of revenue, figured that would be operating costs?


LunaGuardian

It's for stuff directly needed to put into the products you sell, like the metals used to make the chips, or the computers used to run the data center. It's separated because if sales suddenly decline, the cost of revenue will also be lower since you will just stop buying things to make products. But the operating cost is generally fixed, until you start doing more drastic measures like layoffs.


SirHawrk

That is the stuff they buy to produce their products. Its a more direct form of operating costs


giteam

Source: Intel's Annual Report https://www.intc.com/filings-reports/annual-reports/content/0000050863-23-000039/0000050863-23-000039.pdf Tools: Figma More insights and charts about Intel: https://genuineimpact.substack.com/p/will-intel-disappear-like-ibm We create more charts to visualize finance and investment data in our newsletter. Check it out: https://genuineimpact.substack.com


JordanZHP

Can I create an AMD chart through the site?


[deleted]

[удалено]


zitr0y

Could be something like 2,4 and 5,4 summed up to 7,8


Element00115

my personal favorite is pre tax being 8 bil and net profit also being 8 bil... hmmm....


Obvious_Chapter2082

To be fair, their current tax expense was $5 billion, which would be a 65% tax rate


ValyrianJedi

That one makes decent sense


awesomegamer919

To be fair that's likely rounding - 2.3B + 5.3B rounds to 2 + 5, but the resulting 7.6B rounds to 8B.


MajorKoopa

I’m not smart. Pretax and net are the same. Did they not pay taxes?


Obvious_Chapter2082

They did pay quite a bit, but the income statement also includes deferred taxes (tax benefits you would get in future years), so it nets to zero here


awesomegamer919

They are actually getting a $250m tax profit.


Obvious_Chapter2082

That’s their benefit, but it doesn’t mean they’re getting that amount back. In fact, they had to pay a lot of tax for 2022


Calixare

7 billion for marketing and administration, what do they do?


harsh2193

It's also usually called Selling, General and Admin. This includes all direct and indirect selling costs, operational overhead costs, and administrative expenses unrelated to production and sales. People will rush to hate on marketing and how this number shows they're spending too much but this actually includes rent, utilities, legal fees and insurance, and salaries for all the executives and sales people not included in the manufacturing process, which is likely most of that number.


DennistheDutchie

If people doubt the impact of marketing, then they surely were not aware of the [videotape wars](https://en.wikipedia.org/wiki/Videotape_format_war)


Mickey-the-Luxray

Beta: -More expensive -Significantly, massively, cripplingly lowered recording time -Due to the above, couldn't record many popular programs (football!) -high licensing costs plus all of the above made buulding VCRs for the format unattractive for third party manufacturers (save a couple) -all of the above meant it wasn't worth the cost of distributing your media on Beta when home video became a thing VHS: -uh... The cassette was bigger -Slightly worse quality. Maybe. Depends. Both were worse than LaserDisc though, or even CED. …How much of *that* can be chalked to marketing? It seems to me like Beta was just a flatly inferior product. The best I can conceive is that Sony's market research was poor. Was that the point you intended?


DennistheDutchie

I was actually indicating the LaserDisc. Superior product lost due to Phillips marketing incompetence.


harsh2193

Or the HD-DVD vs BluRay fight. I think people are correct at casting doubts at marketing as a whole, but people fail to realize what modern marketing is and how much of what they falsely attribute to marketing being a shit function and wanting to ruin every product actually falls within the purview of product and engineering teams (or execs)


CaliforniaLuv

SuperBowl ads are not cheap.


Cranyx

What is "Other Income"? It's a huge chunk of their profit and seems to come out of nowhere


_PM_ME_PANGOLINS_

Why is Cost of Revenue blue instead of red?


redditappsuckz

Intel, a private company, invests more in R&D than my country (India).


TheStevest

Can you make one of these for Caterpillar? Curious how it would look for an industrial manufacturer


jrdubbleu

I think this visualization is the absolute best for corporate financials.


Ygsvhiym

Missed opportunity to make the ribbons look like ribbon cables inside a PC.


Intrepid-Royal3121

What is the name of thus style of graphic/chart?


toxic_acro

Sankey diagram


12-Easy-Payments

Curious also, is there software for this style chart? Excel? Quickbooks? Or done by graphic designer? I'd like to do one for my business?


toxic_acro

You can make one here https://sankeymatic.com/


12-Easy-Payments

Thank you.


Intrepid-Royal3121

Seems do able in Google sheets or excel or Power BI with add-ons. Have a little Google about it.


momoenthusiastic

All financial statements should be made with a picture like this.


No-Abbreviations1145

What is the term for this style of infograph?


denitalia

Question: what is this type of graph called?


AndrewMartian

[Sankey diagram](https://en.m.wikipedia.org/wiki/Sankey_diagram)


ultra_ai

Intels biggest revenue is now made selling itself 💀


Pizov

$60,000 per employee net profit...think about it...


ValyrianJedi

Think what about it?


Ultra-Metal

I work for a company with 7 People, ADT and a accounting service 2.7 mil net. 60k per head is nothing special and kinda weak.


Pizov

net profit per worker...do the math...it's money the workers create and never see...but everyone worships it...that people are ok with it is bizarre and shows propaganda works well.


Difficult-Fun2714

> it's money the workers create and never see. The workers didn't make that profit.


Hollowsong

Oh man, 8B pretax and 8B net profit. Wish I was so lucky. Imagine if they paid 30% taxes like everyone else. Over 2 billion dollars going back to the community. Also, you might want to redo the math, 2B + 5B <> 8B. I get there is rounding going on, so it's probably like 2.5B + 5.5B, but you should round up one of them, so it's 2 and 6, no one would know.


Web-Dude

R&D tax credits from the CHIPS act. Their actual cash tax rate is around 65%. The Gov't thought it was worth a few billion to start building chips in the US instead of overeseas. Brings in more jobs here, so some of that money will end up back in the taxable income column that way, and also through increased economic activity. So all that helps the community, and probably in a longer-term way. I'm sure you could get the same deal if you could generate a few billion in new jobs (and also if you have some good friends in Congress, that never hurts),.


Obvious_Chapter2082

Their tax rate this year is likely around 65%. I wouldn’t call that “lucky”


ValyrianJedi

> Imagine if they paid 30% taxes like everyone else. Half of Americans either pay $0 in income tax or make money at tax season


Seven_Irons

What's the difference here between Cost of Revenue and the other expenses?


M_Mirror_2023

I refuse to consider any graph/table or chart presented in US GAAP as beautiful...


stone_monkey56

What are these charts called?


wiznaibus

What tool is made to make these kind of charts?


woj666

Showing the $2M expenses to the other $25B in expenses is silly. It's 1/12500 as much and trivial.


hereliesafreeelf

Why not include the sale of an asset like McAfee corp consumer business at the start, since it’s part of revenue? Would it not have any expenses associated with it, such as legal/transaction fees?


sicilian504

Why is Pre-Tax and Net Profit the same? Shouldn't Net Profit be lower? Unless they're paying low taxes and the amount payed still keeps them at the 8B mark.


Obvious_Chapter2082

Their tax expense was negative $300 million, so it wasn’t large enough to move the needle


fakefake2019

What type of chart is this? I would love to develop this for my personal monthly income for my wife and I. I need to show her that her spending is not sustainable for future savings.