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Intel’s Foundry Business Reports $7 Billion Operating Loss, Continues to Struggle

Byeditor

Apr 3, 2024

During a call with investors, Intel reported significant operating losses for its chip manufacturing unit Intel Foundry, with a $7 billion loss in 2023 following the prior year’s loss of $5.2 billion. Despite a 31% drop in revenue from the previous year, totaling $18.9 billion for 2023 compared to $27.49 billion in 2022, Intel plans to move forward with an ambitious foundry plan that will invest $100 billion into chip factories in four US states.

The US is looking to increase its domestic semiconductor business, and Intel’s American foundry plans have helped the company secure nearly $20 billion in CHIPS and Science Act funding. CEO Pat Gelsinger remains optimistic, although he warned investors about anticipated foundry losses in 2024 and mentioned that the unit may not break even until 2030.

Gelsinger assured investors that Intel Foundry would drive significant earnings growth for the company over time, with projections suggesting 2024 as the low point for foundry losses. Despite Microsoft’s commitment to use Intel’s foundry services and contribute $15 billion to revenue, Intel shares fell 5% in trading the following day.

Intel still has a way to go to catch up with semiconductor production leader Taiwan Semiconductor Manufacturing (TSMC), which is expected to see a 20% sales increase in 2024 to $83.4 billion. Gelsinger mentioned that past missteps, like not investing in extreme ultraviolet (EUV) machines from ASML, along with purchasing 30% of its silicon wafers, have contributed to the revenue slide. By improving its EUV capabilities, Intel aims to bring more production in-house.

In addition, Intel announced plans to report the results of its manufacturing operations as a separate unit. Gelsinger believes this move towards transparency and accountability is necessary for the company’s future success.

By editor

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