U.S. chip giant Intel disclosed a significant $7 billion operating loss for its foundry business in 2023, marking an increase from the $5.2 billion loss the previous year. This downturn poses a challenge as Intel strives to regain the technological lead it lost to Taiwan Semiconductor Manufacturing (TSMC) in recent years.
In 2023, Intel's foundry unit generated revenue of $18.9 billion, a 31 percent drop from $27.49 billion in 2022. During an investor presentation, Chief Executive Pat Gelsinger revealed that 2024 would see the worst operating losses for the chip-making division, with expectations to achieve break-even by around 2027.
Gelsinger attributed the losses to strategic missteps, including the decision made a year ago to forgo extreme ultraviolet (EUV) machines from Dutch firm ASML. Although these machines come with a hefty price tag exceeding $150 million, they offer greater cost-effectiveness compared to earlier chip-making tools.
As a result of these challenges, Intel has outsourced approximately 30 percent of its wafer production to external manufacturers like TSMC. However, the company has now transitioned to using EUV tools, aiming to enhance production efficiency as older machinery is phased out.
\"In the post EUV era, we see that we're very competitive now on price, performance, back to leadership,\" Gelsinger stated.
Looking ahead, Intel plans to invest $100 billion in building or expanding chip factories across four U.S. states. The company's turnaround strategy hinges on attracting external companies to utilize its manufacturing services. To provide greater transparency, Intel also announced it will begin reporting the results of its manufacturing operations as a standalone unit. These investments are part of Intel's concerted efforts to catch up with leading chipmakers TSMC and Samsung Electronics.
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Intel discloses $7 billion operating loss for chip-making unit
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