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

Intel reported significant losses for its chip manufacturing unit, Intel Foundry, with a $7 billion loss in 2023. 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.

Intel 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. Despite this, 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.

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. The company still has a long way 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. In an effort towards transparency and accountability, Intel announced it would begin reporting the results of its manufacturing operations as a standalone unit.

By Samantha Jones

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