How INTC (Intel) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a semiconductor manufacturer like Intel makes money is essential for investors and anyone interested in the business of semiconductors. In this post, we break down Intel's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Intel Overview

Intel operates as a leading semiconductor company, designing and manufacturing microprocessors, chipsets, and advanced computing solutions for PCs, servers, data centers, and emerging technologies like AI and edge computing. Revenue comes primarily from its core chip sales and related products, categorized under segments like Accelerated Computing Systems, though in Q4 2025, all specified segments reported $0B with total revenue consolidated under Other at $13.7B.

Revenue Breakdown

• Total Revenue (Q4 2025): $13.7B (-4.1% YoY)
  • Other: $13.7B (100% of total)
  • Accelerated Computing System: $0B (0% of total)
  • Altera Revenue: $0B (0% of total)
  • Mobileye Revenue: $0B (0% of total)
  • Network and Edge Revenue: $0B (0% of total)
  • Growth is powered by core product sales, though overall revenue declined -4.1% YoY amid market challenges in semiconductors.

Gross Profit and Margins

• Gross Profit: $5.0B (36.9% gross margin)
  • Cost of Revenue: $8.6B (-0.5% YoY)
  • Intel maintains robust margins due to economies of scale in manufacturing, optimized supply chain efficiencies, and a focus on high-value computing products.
• Most costs come from manufacturing and fabrication (Cost of Revenue), with no detailed breakdown of sub-categories provided.

Operating Income and Expenses

• Operating Income: $0.7B (+61.9% YoY, 4.9% margin)
• Operating Expenses: $4.4B (-15.4% YoY)
  • R&D: $3.2B (-17.0% YoY, 23.5% of revenue) — focused on next-generation process nodes, AI accelerators, and foundry capabilities to regain technology leadership.
  • SG&A: $1.2B (-6.6% YoY, 8.5% of revenue) — covers sales, marketing, and administrative functions supporting global operations.
  • Intel continues to prioritize innovation while maintaining efficiency through cost controls and restructuring efforts.

Net Income

• Pre-Tax Income: $0.3B (-43.6% YoY, 2.5% margin)
• Income Tax: $0.7B (198.5% effective tax rate)
• Net Income: $0.6B (+369.0% YoY, 4.3% net margin)
• Intel converts a moderate portion of sales into profit due to operational efficiencies and despite a high tax burden from discrete items.

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What Drives Intel's Money Machine?

• Other (Core Revenue): 100% of revenue, encompassing traditional CPU sales, data center products, and consolidated operations across segments.
• R&D Investment: $3.2B (23.5% of revenue), funding critical areas like Intel 18A process technology and AI chip development.
• Cost Controls: Operating expenses down -15.4% YoY, reflecting disciplined spending amid revenue pressures.
• Future growth areas: Foundry services, AI PCs, and edge computing, though segments like Mobileye and Altera showed $0B revenue and remain in investment phases.

Visualizing Intel's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after significant investments, 4.3% of revenue drops to the bottom line.

Key Takeaways

• Intel's money comes overwhelmingly from Other (core chip sales)
• High gross and net margins illustrate the power of Intel's scalable manufacturing model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by AI, foundry expansion, and cost discipline

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FAQ About Intel's Income Statement

1. What is the main source of Intel's revenue in 2025?

Intel generates over 100% of its revenue from Other (core operations including CPU and data center products). Specified segments like Accelerated Computing and Mobileye contributed $0B in Q4 2025.

2. How profitable is Intel in Q4 2025?

Intel reported net income of $0.6B in Q4 2025, with a net margin of approximately 4.3%, reflecting moderate profitability driven by gross margin stability and operating cost reductions.

3. What are the largest expense categories for Intel?

The biggest expenses on Intel's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $3.2B in Q4 2025, as Intel prioritizes advanced process technologies and AI.

4. Why does Accelerated Computing System operate at a loss?

Accelerated Computing System, despite generating $0B in revenue, is part of broader investments posting challenges in Q4 2025. This is because Intel aggressively invests in AI and high-performance computing, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Intel's effective tax rate compare to previous years?

Intel's effective tax rate in Q4 2025 was 198.5%, higher than previous years. This high rate is primarily due to discrete tax items, valuation allowances, and non-recurring adjustments.