Intel’s Foundry Business Continues to Suffer from $7 Billion Operating Loss

Intel’s Chip Manufacturing Unit Struggles with $7 Billion Loss in 2023, Despite Plans for $100 Billion Investment

Intel’s chip manufacturing unit, Intel Foundry, reported a significant loss of $7 billion in 2023, adding to the prior year’s loss of $5.2 billion. Despite a revenue drop of 31% from the previous year, with $18.9 billion in revenue for 2023 compared to $27.49 billion in 2022, Intel announced plans to 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 helped the company secure nearly $20 billion in CHIPS and Science Act funding. CEO Pat Gelsinger expressed optimism about the future of Intel Foundry, even though he expects more losses in 2024 and anticipates the unit may not break even until 2030. However, these assurances did not prevent a 5% drop in Intel’s shares during trading on Wednesday as Microsoft previously reported that it would use its foundry services and contribute $15 billion to revenue.

Intel previously reported that Microsoft would use its foundry services and contribute $15 billion to revenue. However, these assurances did not prevent a 5% drop in Intel’s shares during trading on Wednesday as Microsoft previously reported that it would use its foundry services and contribute $15 billion to revenue. The company still has a long way to go to catch up with semiconductor production leader Taiwan Semiconductor Manufacturing (TSMC), which is expected to see sales expand by 20% in 2024 to $83.4 billion.

Gelsinger attributed the revenue slide to past missteps, including a decision not to invest in extreme ultraviolet (EUV) machines from Dutch firm ASML. He shared that Intel now buys about 30% of its silicon wafers and emphasized the importance of improving EUV capabilities to bring more production in-house. By doing so, Intel aims to become more competitive in terms of price, performance, and overall leadership as well as transparency by announcing it will begin reporting the results of its manufacturing operations as a standalone unit.

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