[News] Intel’s Chip Making Unit Lost $7 Billion Last Year; Foundry Unit Hits Loss Peak This Year

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Intel revealed on the 2nd that its manufacturing business’s operational losses deepened, dealing a significant blow to Intel’s attempts to surpass TSMC and regain its leading position.

According to Reuters, Intel stated that its manufacturing division incurred a $7 billion loss in 2023, a more severe downturn than the $5.2 billion loss in the previous year, with revenues reaching $18.9 billion, a 31% decrease from the previous year.

In the same report, Intel CEO Pat Gelsinger admitted that 2024 would be the year of worst operating losses for the company’s wafer fabrication business, with the break even expected by 2027.

The primary causes for the losses were attributed to bad decisions, including opposition to using ASML EUV equipment a year ago. The cost of this equipment could exceed $150 million but is more cost-effective than earlier chip manufacturing equipment.

Gelsinger believes that due to these mistakes, Intel has outsourced approximately 30% of its wafer production to external contract manufacturers like TSMC, with a goal to reduce this share to about 20%.

Intel plans to invest $100 billion in constructing or expanding chip factories across four states in the United States and convincing other companies to use Intel’s manufacturing services. Consequently, Intel has begun segregating its wafer foundry business into an independent division and financials, heavily investing to catch up with TSMC and Samsung.

According to TrendForce’s previous report on the fourth quarter of 2023, global semiconductor foundry revenue rankings showed that Intel Foundry Services (IFS), which ranked ninth globally in the third quarter of 2023, was pushed out of the top ten by PSMC and Nexchip due to factors such as the transition between old and new CPU generations and lackluster inventory momentum. At the same time, the top three semiconductor foundries globally were TSMC, Samsung, and GlobalFoundries.

(Photo credit: Intel)