Intel has been facing a financial crisis in recent years, particularly due to the poor performance of its product portfolio’s gross margins, with continuous declines in revenue from the AI data center and consumer markets. To reverse this trend, new CEO Chen Liwu and head of product Michelle Johnston have announced a strict strategic adjustment, explicitly requiring all new products to achieve a gross margin of over 50%.
Intel has clearly stated that it will stop developing products with gross margins below 50%. This measure has led to the cancellation of some planned projects, and R&D resources will be concentrated on high-profit projects. Michelle Johnston revealed at the 2025 Bank of America Global Technology Conference that this strategy has already been implemented in the product development process; any project that cannot meet the gross margin target will not be allocated engineering resources. This means that Intel’s future product lines, such as Panther Lake and Nova Lake processors, will be designed with higher profit margins to improve the efficiency of revenue conversion in the consumer market.
Product Roadmap and Technological Advancements #
On its technology roadmap, Intel has also demonstrated clear planning. The Arrow Lake series processors were launched in 2024, including the Core Ultra 200H/HX series and low-power 200U series for laptops, as well as the 200S series for desktops.
The next-generation Panther Lake is planned for release in the second half of 2025, adopting Intel’s self-developed 18A process technology (1.8 nanometers), and optimized for the AI PC market. Panther Lake will support LPDDR5X and DDR5 memory, provide 8 PCIe 4.0 and 4 PCIe 5.0 interfaces, and core configurations covering 8 to 16 cores, suitable for mainstream to entry-level laptops. Nova Lake is planned for release in 2026, potentially using Intel’s 14A process or TSMC’s N2P node. Its highest configuration could reach 16 performance cores, 32 efficiency cores, and 4 low-power cores, totaling 52 cores, with a last-level cache of up to 180MB. Nova Lake’s single-core performance will increase by over 60% compared to Raptor Lake, marking a significant technological leap for Intel in the desktop processor field.
Foundry Strategy and Capital Expenditure #
To balance technology and cost, Intel continues to advance its dual-sourcing foundry strategy. Nova Lake will simultaneously use Intel’s own foundries (IFS) and TSMC’s advanced processes to ensure production efficiency and product quality. Michelle Johnston emphasized that the company will flexibly choose foundry partners based on market demand and process advantages. This strategy is an adjustment to former CEO Pat Gelsinger’s “IDM 2.0” strategy, reflecting Intel’s pragmatic approach in the global supply chain. Additionally, Intel plans to control capital expenditure in 2025 to within $20 billion, a figure lower than previous expectations, primarily for optimizing capacity at its Ohio and Ireland factories and reducing net expenditure through government incentives and tax credits.
AI and Data Center Market Challenges #
In the artificial intelligence and data center sectors, Intel’s performance is in urgent need of a breakthrough. In 2024, although Intel’s Gaudi 3 AI accelerator made some progress, it significantly lagged behind NVIDIA and AMD in market share. According to first-quarter 2025 data, NVIDIA held a 92% share in the AIB GPU market, AMD 8%, while Intel was nearly zero. Intel executives stated that the company will actively pursue every opportunity in the data center market, striving to reverse the trend of declining share by optimizing product portfolios and pricing strategies. In 2025, Intel plans to ship over 100 million AI PCs and collaborate with more than 200 independent software vendors to optimize over 400 AI functions, further solidifying its position in the end-user AI market.
Financial Performance and Market Share #
Financial data shows that Intel’s fourth-quarter 2024 revenue was $14.3 billion, a 7% year-over-year decrease, with a gross margin of 39.2%, down 6.5 percentage points from the same period last year. Client Computing Group (CCG) revenue was $8 billion, a 9% year-over-year decrease, but full-year revenue increased by 4% year-over-year to $30.3 billion. For the first quarter of 2025, Intel expects total revenue to be between $11.7 billion and $12.7 billion, with non-GAAP earnings per share of $0, indicating that the company still faces profitability pressure.
Despite the challenges, Intel maintains its lead in the consumer CPU market. In 2024, Intel’s share in the x86 CPU market was 75.4%, while AMD steadily grew to 24.4%. In the laptop segment, Intel’s market share slightly rebounded, but in the desktop and server markets, competitive pressure from AMD continues to intensify. Analytical agencies predict that AI PC shipments will reach 114 million units in 2025, a 165.5% year-over-year increase. With its extensive layout of the Core Ultra series and Arrow Lake, Intel is expected to play an important role in this growing market.
Intel’s strategic adjustment reflects its response to a complex market environment. By focusing on high-profit products, optimizing foundry cooperation, and increasing investment in the AI sector, the company is striving to reshape its competitiveness. However, financial recovery and the fight for market share will still take time. 2025 will be a crucial year for Intel to prove the effectiveness of its strategy, and the performance of Panther Lake and subsequent products will directly impact its position in the global semiconductor industry.