What CEOs Are Saying - 7.25.25

Important signals from three of yesterday's semiconductor earnings calls

Three big semiconductor companies (Intel, Renesas Electronics, and STMicroelectronics) held their Q2 2025 earnings calls yesterday. Each delivered mixed quarterly results while discussing strategic shifts that CEOs would be wise to understand.

Some key themes from the calls:

Restructuring over growth

All three companies put operational discipline over ambitious expansion, with Intel cutting management layers by 50%, Renesas writing off a $1.6 billion silicon carbide bet, and STMicroelectronics taking $190 million in manufacturing restructuring charges.

Customer-anchored capital allocation

The era of "build it and they will come" is over. Intel's new CEO explicitly rejected speculative capacity building, while STMicroelectronics is betting on portfolio breadth to navigate unpredictable automotive demand.

Timeline-mismatch management

Each company grappled with the fundamental tension between quarterly investor expectations and multi-year chip development cycles, with leaders demonstrating unusual transparency about what they can and cannot control.

Now onto the calls.

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Intel Corporation (INTC) Earnings Call

Call date: July 24, 2025

Intel's Q2 results tell a classic turnaround story. Intel’s business performed better than expected… but financial cleanup obscured the progress. The disconnect is the result of nearly $2 billion in restructuring charges (severance, accelerated depreciation, etc.) as CEO Lip-Bu Tan resets the company, including a culling of half its middle management.

1. Performance

A positive revenue surprise offset by deeper restructuring pain.

Intel exceeded revenue guidance ($12.86B, up 0.2% Y/Y), but posted a GAAP loss largely due to $1.9B in the aforementioned restructuring charges and impairments. Without these one-time hits, Intel would have posted a $0.10 EPS beat alongside the revenue upside. CFO David Zinsner explained:

We recognized approximately $800 million of noncash impairment and accelerated depreciation charges... These charges resulted in Q2 gross margin of 29.7% and EPS of minus $0.10.

Zinsner added:

Excluding these charges, our second quarter non-GAAP gross margin would have been 37.5% and non-GAAP EPS would have been $0.10, both results ahead of our Q2 guidance.

2. Strategy for the Future

No more Field of Dreams.

Lip-Bu Tan is shifting Intel's CapEx and foundry approach from speculative scale-building to customer-anchored execution. This represents a fundamental change in capital allocation philosophy:

I do not subscribe to the belief that if you build it, they will come. Under my leadership, we will build what customers need, when they need it and earn their trust through consistent execution.

He confirmed Intel is halting several expansion projects: