Intel CFO Says Free Cash Flow Probably Stays Negative In 2027 — Calls Year A 'Knothole'
Dave Zinsner said a pile of factory spending hits in one year, with 2026 gross capital spending on track for $20 billion.
Intel will probably not generate positive free cash flow in 2027, Chief Financial Officer Dave Zinsner told analysts on the chipmaker's third-quarter earnings call Thursday, because spending on three manufacturing nodes lands in the same year. Intel reported $5.1 billion in operating cash flow for the third quarter.
"An investment year"
A UBS managing director asked whether Intel was committed to free cash flow next year, noting that many analysts expect capital spending near $30 billion. Zinsner said Intel has not locked a number, which it does not do until late in the year, but has a directional sense and has been placing purchase orders with equipment vendors given lead times.
He called 2027 "an investment year" and said it is "probably not a dynamic where we're going to have positive free cash flow next year." Intel will be ramping 18A, ramping Intel 3 to some extent, and positioning 14A to begin production in 2028. "That's a lot of investment all hitting us in one year," he said.
The company has to get through what Zinsner called "basically a knothole here in 27."
The capital spending numbers
Gross capital spending for 2026 remains on track for $20 billion, Zinsner said, and 2027 spending will be "up strongly." Firm purchase orders to equipment suppliers rose nearly 40% from the prior quarter. Most of the current spend is equipment, he told a Cantor Fitzgerald analyst, with Ohio still in heavy construction.
He argued the outlay pays off: Intel expects at least a 20% return on investment on each node, and Intel 3 will be profitable next year. He said Intel remains committed to deleveraging in 2027 despite higher spending and working capital.
The cash burn, he said, is why Intel raised $23 billion in an equity offering in early August. Intel ended the quarter with about $54 billion in cash and short-term investments, plus $15 billion of borrowing capacity under its extended revolvers, up from $10 billion.
Growth year, weak PCs
Zinsner described 2027 as a growth year driven by data-center demand, though supply of wafers and substrates stays tight in the first half. For PCs, Intel plans for unit demand to fall roughly 10% in 2027 after about 12% in 2026, as memory shortages hit customers.
CEO Lip-Bu Tan said Intel is evaluating ways to accelerate its Ohio build-out and hopes to share more in the near future.
Zinsner's pitch to holders: Intel 7 is already profitable, Intel 3 will be next year, and "these businesses generate lots of cash flow" once 2027 passes.
Sources
- Intel (INTC) Q3 earnings report 2026 — CNBC
- Intel crashes as Q3 results, guidance miss Wall Street's forecasts (INTC:NASDAQ) | Seeking Alpha — seekingalpha.com
- Intel's stock tumbles after earnings. Here's what's worrying Wall Street. — MarketWatch
- Intel tops Q3 earnings estimates, but falls short of Q4 outlook on sluggish PC sales as stock plunges 20% — Yahoo Finance
- Intel Forecast Disappoints as Israel Fab Blast, PC Weakness Weigh — Reuters
