Timothy Green, The Motley Fool
5 min read
In This Article:
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Intel slashed its dividend in 2023 and suspended it in 2024 amid mounting financial strain.
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The balance sheet is loaded with debt, and cash flow is deeply negative as manufacturing investments pile up.
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The dividend is unlikely to return until Intel stabilizes its product market share, turns the foundry profitable, and reduces its debt load.
Semiconductor giant Intel (NASDAQ: INTC) slashed its dividend in 2023 and then pulled the plug completely in 2024 amid chronic struggles and weak financial performance. The initial dividend cut helped the company preserve cash as it plowed capital into its manufacturing operations, while the dividend suspension was coupled with significant layoffs and came a few months before former CEO Pat Gelsinger was shown the door.
While Intel has a new CEO with plans to aggressively cut costs and streamline operations, the dividend is unlikely to make a comeback any time soon.
Intel has spent the past few years investing in new manufacturing facilities and new process technologies in a bid to regain its manufacturing advantage against TSMC and build out a foundry business of its own. This was always going to be a multiyear endeavor that consumed far more cash than it produced in the beginning. Even today, with the Intel 18A process marching toward volume production, the foundry business generates minimal revenue from external customers.
This heavy spending occurred just as Intel's products business hit the skids. A severe downturn in PC demand following a pandemic-era boom hurt the client computing business, as did competition from AMD. In the data center segment, strong products from AMD and a shift in spending toward AI accelerators knocked down revenue and decimated profits.
The net result of all of this is a balance sheet that has taken a beating. While Intel had around $21 billion in cash and short-term investments at the end of the first quarter of 2025, it also had more than $50 billion in debt. Intel's debt load has been climbing for the past 15 years, rising from next to nothing in 2010 to nearly $30 billion in 2020 and topping $50 billion today.
Intel has plenty of cash on hand but needs a big buffer to continue its manufacturing investments and weather an uncertain economic environment. Until Intel's debt is reduced, a dividend is highly unlikely.
Intel's products business, which includes all its first-party PC CPUs, server CPUs, and other products, is still profitable. In the first quarter, the products business generated an operating income of $2.9 billion on $11.7 billion in revenue.
