Intel just set a tough rule for new products: they must bring in at least 50% profit. This means that for every dollar spent, the product should return at least two dollars. The company’s product division CEO, Michelle Johnston Holthaus, announced this during a conference.
The goal is to make more money and focus on projects that will pay off. Recently, Intel’s profit margins have been under pressure. While they tried to stabilize manufacturing and product lines, their profitability suffered. The foundry segment, in particular, struggled to stay above 40%.
Now, Intel wants to ensure that all new products meet the 50% profit margin target. This means they will be more careful about which projects to invest in. They don’t want to waste resources on initiatives that might not pay off.
So, how will this work?
- Internal filter: only products that can return at least $2 for every $1 invested will be considered.
- Engineering teams will only work on projects that meet this target from the start.
- Product roadmaps will be revised to ensure that even expected products, like Panther Lake and Nova Lake, will only move forward if they are financially viable.
This change is part of a larger transformation led by Intel’s CEO, Lip-Bu Tan. He wants to turn the company around and regain market trust. For investors and analysts, this is a clear sign that Intel is focusing on profitable projects and moving away from initiatives that don’t make money.
However, some people worry that this might slow down innovation. Risky products and emerging technologies, like dedicated GPUs and specialized chips, might not meet the required profit margin. This could threaten the diversity of long-term solutions.
What’s driving this change?
Intel’s foundry segment has struggled to stay above 40% profitability, with projections showing it might not improve until 2030. This, combined with the need to stabilize manufacturing and product lines, has put pressure on the company’s profit margins.
How will this affect Intel’s future?
The new rule might lead to a more focused approach to product development, but it could also limit innovation. As the company prioritizes profitable projects, some emerging technologies might be left behind. Only time will tell how this change will impact Intel’s position in the market.
What’s next for Intel?
The company will need to balance its desire for profitability with the need to innovate and stay competitive. As the tech industry continues to evolve, Intel will need to find a way to make money while still pushing the boundaries of what’s possible.