Intel, the chip maker aiming to reclaim its technology lead lost to TSMC in recent years, has disclosed significant operating losses for its foundry business, marking a setback for the company.
Revenue for the Unit Also Saw a Significant Decline
In 2023, Intel's manufacturing unit reported operating losses of $7 billion, a substantial increase from the $5.2 billion losses recorded the previous year. Revenue for the unit also saw a significant decline, dropping 31% from $27.5 billion to $18.9 billion.
Following the disclosure, Intel's shares experienced a 4.3% decline after the documents were filed with the US Securities and Exchange Commission.
During an investor presentation, CEO Pat Gelsinger acknowledged that 2024 would likely see the worst operating losses for the chip-making business. However, the company aims to achieve break-even on an operating basis by around 2027.
Gelsinger attributed the challenges faced by the foundry
business to past decisions, including the reluctance to adopt extreme
ultraviolet (EUV) machines from ASML. Intel has since transitioned to using EUV
tools, which are more cost-effective but come with high upfront costs.
The Company's Turnaround Strategy
As part of its efforts to revitalize its chip-making operations, Intel plans to invest $100 billion in building or expanding chip factories across four US states. The company's turnaround strategy hinges on attracting outside companies to utilize its manufacturing services.
To enhance transparency and focus on its manufacturing operations, Intel will start reporting the results of its foundry business as a standalone unit.
Despite facing fierce competition from TSMC and Samsung
Electronics, Intel remains committed to closing the technology gap through
continued investment and strategic initiatives.