In a recent setback for Intel Corp., the leading producer of personal computer processors, the company's shares tumbled in late trading following a less-than-optimistic outlook for the current period. The forecast indicates that Intel continues to face difficulties in reclaiming its position at the forefront of the chip industry.

According to a statement released on Thursday, Intel expects sales in the second quarter to reach approximately $13 billion. This falls short of the average analyst estimate of $13.6 billion, highlighting the company's ongoing struggle in terms of revenue. Moreover, the projected profit for the period is anticipated to be 10 cents per share, excluding certain items, well below the estimated 24 cents per share.

The underwhelming outlook underscores the challenges faced by Chief Executive Officer Pat Gelsinger in revitalizing Intel. Once the dominant chipmaker globally, Intel now lags behind competitors like Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. in terms of both revenue and technological expertise.

Acknowledging the slower-than-expected business performance, Chief Financial Officer Dave Zinsner expressed optimism for improvement later in the year, stating, "The back half of the year is going to have some pretty good strength in it." However, Intel was unable to meet the demand for processors used in new AI-enabled PCs, citing insufficient component production at their packaging facilities.

Following the release of the report, Intel's shares plunged as much as 9.4% in extended trading, adding to the existing 30% decline this year. These figures make Intel the second-worst performer on the Philadelphia Stock Exchange Semiconductor Index.

In the first quarter of the year, Intel reported a profit of 18 cents per share, excluding certain items, with revenue amounting to $12.7 billion. Analysts had estimated a lower profit of 13 cents per share, but sales aligned with expectations. The company's new business structure, which offers insight into the financial performance of its manufacturing operations, was implemented for the first time during this reporting period.

Intel has been actively expanding its foundry business, which involves manufacturing components on a contract basis for external companies. However, recent financial disclosures regarding its factory network indicate widening losses as a result of increased spending on new plants. Intel does not anticipate the foundry business becoming profitable for several years.

In 2023, the new manufacturing division, Intel Foundry, experienced a decrease in sales to $18.9 billion from the previous year's $27.5 billion. The first quarter of 2024 saw the unit generate $4.4 billion in revenue but incur an operating loss of approximately $2.5 billion, surpassing the losses of the preceding quarter and the same period the previous year.

Breaking down the sales figures, Intel's PC-related chip sales amounted to $7.5 billion, slightly surpassing the estimated $7.4 billion. The data center and AI division's revenue reached $3 billion, in line with Wall Street projections, while networking chips contributed nearly $1.4 billion in sales, surpassing the projected $1.3 billion.

Intel's gross margin, a crucial measure of manufacturing efficiency, was 45.1% in the first quarter but is expected to decline to 43.5% in the current period. Historically, Intel has maintained margins of over 60%.

Despite the challenges, Intel remains hopeful for the second half of the year as it plans to introduce a new version of its Gaudi chip, a rival to the popular AI accelerators offered by Nvidia. Once the latest version hits the market, Intel anticipates accruing approximately $500 million in sales for this product line in 2024.

Furthermore, the company aims to drive down costs and expects its manufacturing business to break even in the next couple of years. CEO Pat Gelsinger revealed that Intel has secured another customer for its upcoming production technology, 18A, which will be launched in 2025. The undisclosed customer, operating in the aerospace-defense industry, has chosen to have production conducted in the United States.

To date, Microsoft Corp. is the only publicly revealed company that will utilize Intel's 18A technology for specific in-house chip designs. The partnership highlights Intel's commitment to providing efficient and innovative solutions to its clients.

As Intel grapples with a difficult comeback and a lackluster forecast, the company is working diligently to regain its status as a leading player in the ever-evolving chip industry.