Intel earnings drop, revenue edges higher

Intel Corp.'s earnings fell last quarter as the company ramped up spending on new facilities and products, part of Chief Executive Officer Pat Gelsinger's efforts to revive the semiconductor giant's fortunes.

The chip company posted $20.5 billion in fourth-quarter sales, up 3% from the year-earlier period. The company generated net income of $4.6 billion, down 21% year-over-year. Wall Street expected sales of $19.2 billion and net income of $3.2 billion.

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Intel said it expects sales of roughly $18.3 billion for the current quarter. Analysts surveyed by FactSet expect around $18.1 billion.

The U.S. semiconductor giant is in a period of transition after falling behind rivals in chip making, and competitors have taken market share from it in some semiconductor categories. Mr. Gelsinger, who took over as CEO in February 2021, has been trying to reverse the decline and said in December that his turnaround plans could take five-plus years.

The quarterly results come amid a sustained global chip shortage, brought on by booming demand during the pandemic for electronic goods and services and snarled supply lines. The chip drought has led to widespread disruptions, including forcing car makers lacking chips to idle plants and driving up prices for some electronic goods.

Mr. Gelsinger said Wednesday that the chip shortage is starting to let up in some areas but still has the potential to last into 2024.

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"It's still challenging," he said. "You're just going to see incremental improvements quarter by quarter."

Intel shares fell more than 1% in after-hours trading. The stock closed Wednesday's regular trading session around 1% higher at $51.69, after it won a reprieve from a $1.2 billion fine by the European Union's antitrust regulator issued more than a decade ago.

Intel over the past year has expanded its chip-making capabilities, both domestically and abroad. Most recently, the company announced a $20 billion investment for new chip-making factories in Ohio, explaining that the semiconductor industry is expected to double from $500 billion in combined annual sales to $1 trillion by the end of the decade.

"We just have a lot of catching up to do in building out the capital footprint," Mr. Gelsinger said on an analysts call Wednesday.

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Intel in 2021 laid out big chip-making investments in Arizona and New Mexico and a roughly $95 billion commitment in Europe.

The company scored its legal victory in Europe on Wednesday when the EU's General Court in Luxembourg struck down much of a 2009 finding that Intel had abused its dominant position by issuing loyalty rebates and payments that restricted rival chip maker Advanced Micro Devices Inc. from competing. The court said that the analysis carried out by the European Commission, the bloc's main antitrust regulator, was incomplete.

Ticker	Security	Last	Change	Change %
INTC	INTEL CORP.	24.05	+0.40	+1.69%

The judgment is a blow to the European Commission, which is seeking to expand its reach through new regulations and a reinterpretation of its existing powers.

Intel welcomed the outcome. The EU could appeal the outcome and said it was reviewing the judgment.

Mr. Gelsinger said business in China recovered in the fourth quarter after taking a hit in the preceding quarter due to the country's crackdown on the time children spend playing videogames. The crackdown had previously hurt Intel's server-chip sales.

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He declined to provide a timeline for its self-driving car unit's initial public offering, which is slated to happen later this year. The unit, called Mobileye, brought in record revenue for the full year.

Kim Mackrael and Daniel Michaels contributed to this article.

Write to Meghan Bobrowsky at Meghan.Bobrowsky@wsj.com