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Intel revealed significant operating losses in its foundry business last year. The losses marked a setback for the chipmaker's efforts to reclaim a technological advantage lost to Taiwan Semiconductor Manufacturing in recent years.
Operating Losses and Revenue Decline
According to the Inquirer, the manufacturing unit recorded operating losses of $7 billion in 2023, a notable increase from the $5.2 billion loss reported in the previous year. Despite this, the unit's revenue declined to $18.9 billion in 2023, reflecting a 31% drop from $27.49 billion in the preceding year.
Future Projections and Challenges
During a presentation for investors, Intel's Chief Executive Officer, Pat Gelsinger, projected that 2024 would mark the peak of operating losses for the company's chipmaking business. Intel anticipates reaching break-even on an operating basis by around 2027.
Reuters reported that Gelsinger attributed the challenges faced by the foundry business to past decisions, highlighting the avoidance of using extreme ultraviolet (EUV) machines from ASML. Despite the high cost of EUV machines exceeding $150 million, they are more cost-effective than earlier chip manufacturing tools.
Strategic Shifts and Future Investments
In response to previous missteps, Intel has outsourced approximately 30% of its wafer production to external contract manufacturers like TSMC. The company aims to reduce this percentage to around 20%.
Intel's transition to EUV tools is expected to enhance production efficiency, with plans to invest $100 billion in building or expanding chip factories across four U.S. states. The company's revival strategy hinges on attracting external partners to leverage its manufacturing services.
As a pivotal move in this strategy, Intel will begin reporting the outcomes of its manufacturing operations as a separate unit. The company's aggressive investments aim to narrow the gap with industry rivals such as TSMC and Samsung Electronics Co Ltd.
Photo: Intel Newsroom
