Optane’s 2020 half billion dollar operating loss

Intel made a greater than half-billion dollar loss on its Optane 3D XPoint business in 2020.

Update. Intel’s Optane head leaves and $500 million revenue number claim added; 9 Feb 2022.

Some gory financial details are laid bare in Intel’s annual 10K SEC filing for 2021, which states in the Non-Volatile Solutions Group section (page 33): “Revenue decreased $1.1 billion, driven by $712 million lower ASPs due to market softness and pricing pressure and $392 million due to the transfer of the Intel Optane memory business to DCG.”

It also says “Operating income also benefited from the transfer of the Intel Optane memory business from 2021 NSG results (a loss of $576 million in 2020).”

Q3 2021 Optane numbers

We were able to show this chart in November last year, based on Intel’s 10-Q SEC filing for the third 2021 quarter, and showing some Optane revenues and operating income numbers to Q3 in Intel’s fiscal 2021:

The revenues for Q3 2021 – $188 million – are considerably higher (54.3%) than the Q3 2020 revenues of $86 million. 

With the the recent Q4 2021 10K statement we can add Q4 revenue and full year 2020 operating income numbers, and back-calculate others (in italics in the table):

It’s still a partial picture but we can see that Intel made a $576 million operating loss on Optane products in its 2020 year. The nine-month number for 2021, $271 million, was 9.1 per cent lower than the nine-month number for 2020, $298 million, and the Q4 2021 revenue number of $121 million was sequentially down on Q3’s $188 million.

Did Intel’s Optane business make an operating loss in 2021? We don’t know, but suspect it did because the 2020 operating losses were 134.9 (Q3) to 158.7 (Q1+Q3+Q3) per cent higher than revenues. Applying the lower ratio to the $392 million full 2021 year Optane revenues we would expect a $529 million operating loss in 2021.

A final thought: if Intel gains CPU performance superiority over AMD it won’t need to use Optane as a loss-leading way for Xeon servers to get a performance advantage over AMD servers. Then it could get rid of a substantial chunk of operating losses by exiting the XPoint business.

Update

CRN revealed that Alper Ilkbahar, VP and GM for Intel’s Data Centre Memory and Storage Solutions, who runs its Optane business, is resigning for personal reasons. David Tuhy takes over as Optane Group GM. A memo from Sandra Rivera, EVP and GM of Intel’s Data Centre and AI group, seen by CRN said; “Optane revenues have grown to $500 million in fewer than 3 years.”

This $500 million does not accord with intel’s 10-Q filing figure of $392 million. Intel wouldn’t comment on the Rivera memo’s $500 million number.