Intel grew revenue 25 percent and reported an $11bn loss, on a $12.5bn charge tied to shares owed to the US government

$12.5bn. That is the single charge that turned a quarter of accelerating growth at Intel into an $11.0bn loss.

Revenue for the second quarter was $16.1bn, up 25 percent from $12.9bn a year earlier. Chief executive Lip-Bu Tan said the result represented the company's strongest revenue growth in more than fifteen years. Gross margin came in at 40.4 percent, against 27.5 percent a year ago, and the company swung to $1.8bn of operating income from a $3.2bn operating loss.

Then the charge. Intel reported a mark-to-market loss of $12,529m, or $2.45 a diluted share, on what it calls Escrowed Shares. These are shares of Intel common stock held in escrow for release to the US Department of Commerce as the company performs and receives cash under its CHIPS Act Secure Enclave agreement, and the obligation sits on the balance sheet as a derivative liability created by Intel's Warrant and Common Stock Agreement with the federal government. The quarter's charge is the net change in the fair value of both the shares released during the period and those still in escrow at its end. Intel excludes the item from its adjusted figures.

On that adjusted basis the company earned $2.2bn, or 42 cents a diluted share, against a 10-cent loss a year earlier.

The segments diverged. Data Center and AI revenue rose 59 percent to $6.3bn and the renamed Client Computing and Physical AI group rose 13 percent to $8.9bn. Intel Foundry grew 31 percent to $5.8bn and lost $2.1bn at the operating line.

Cash from operations was $7.0bn. Adjusted free cash flow was negative $8.4bn, after a negative $12.2bn of net partner contributions. For the third quarter Intel guided to revenue of $15.8bn to $16.8bn, GAAP earnings of 31 cents a share and 38 cents on an adjusted basis.