Intel Stumbles: Foundry Ambitions Hit with Heavy Losses

U.S. President Joe Biden tours the Intel Ocotillo Campus
U.S. President Joe Biden visits Intel’s Ocotillo Campus in Arizona, where the company is expanding its semiconductor manufacturing operations.

Breaking Barriers: Intel’s Foundary Venture

In a move to disrupt the traditional semiconductor industry, Intel, led by CEO Patrick Gelsinger, has ambitious plans to establish an external foundry business, making chips for companies beyond its own operations. This strategic shift aims to position Intel as a dominant force in the chip-making realm, competing with top players like Taiwan Semiconductor Manufacturing Company (TSMC).

Financials Unveiled: Losses Linger

LA News Center has acquired and analyzed Intel’s latest financial disclosures, revealing a billion operating loss for its foundry business in 2023. This loss, on the heels of a .2 billion loss in 2022, underscores the challenges Intel faces in ramping up its foundry operations.

Unveiling Hidden Revenue Sources

For the first time, Intel has disclosed the revenue generated by its foundry business, which totaled .9 billion in 2023. This bold transparency move highlights the company’s determination to compete in a highly competitive market.

Past Mistakes Cast a Shadow

CEO Gelsinger has acknowledged the company’s past decisions and slow adoption of EUV technology as contributing factors to the foundry business’s lack of profitability. EUV, short for extreme ultraviolet lithography, is crucial for producing the most advanced chips.

Road to Recovery: A Challenging Journey

Intel faces an uphill battle to recover its foundry business losses, projecting peak losses in 2024. The company anticipates breaking even by a period between 2026 and 2030.

Bold Projections: Chips Act Catalyst

Despite these challenges, Intel remains optimistic about the future of its foundry business. The company expects Microsoft to utilize its foundry services, and Intel has already secured billion in foundry revenue. The government’s CHIPS Act, which Intel successfully lobbied for, has also provided a vital billion funding boost.

Empowering Products Division

Recent restructuring has led to the creation of a newly organized Products division, comprising PC and server processors. This division’s operating income reached .3 billion in 2023, a testament to its continued growth.

A Leap into the Future

Intel Foundry’s ambitions extend beyond financial recovery; it aims to drive “considerable earnings growth” for the company. This bold aspiration showcases Intel’s commitment to innovation and its vision of becoming a leader in the global semiconductor industry.

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