Intel Foundry Struggles with Billion-Dollar Losses, but CEO Remains Optimistic for Future Growth

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

Intel has 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.

Despite this setback, CEO Pat Gelsinger remains optimistic about the future of Intel Foundry and believes it will drive significant earnings growth for the company over time. He assured investors that despite anticipated foundry losses in 2024, the unit may not break even until 2030.

Intel Foundry has been instrumental in helping the company secure nearly $20 billion in CHIPS and Science Act funding, which is aimed at increasing domestic semiconductor production and boosting national security. Gelsinger is confident that the American foundry plans will help achieve these goals and contribute to long-term success for Intel as well as the country as a whole.

The US is looking to increase its domestic semiconductor business, and Intel’s American foundry plans have helped it secure significant funding from government initiatives such as CHIPS and Science Act. 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 after reporting its financial results for Q1 of 2023.

Intel still has a way to go before it catches 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 believes that past missteps like not investing in extreme ultraviolet (EUV) machines from ASML or purchasing only about one-third of its silicon wafers from outside suppliers have contributed significantly to revenue decline

Leave a Reply