Intel is reportedly lagging behind a boom in the chip industry after the tech giant reported an operating loss for its chip division of about $7 billion for 2023. Intel shares fell 4.3% after the filing in the US.
Compared to a $5.2 billion operating loss the previous year, the tech giant said the manufacturing division’s operating loss for 2023 was $7 billion, a more substantial loss. In 2023, the division’s sales amounted to $18.9 billion, which is 31% less than the $27.49 billion in the previous year.
During a presentation to investors, the company’s CEO Pat Gelsinger said that the chip division will experience the largest operating losses in 2024 and that the company expects to break even by around 2027.
This is reportedly the first time that Intel has independently disclosed the full revenue of its foundry division. In the past, Intel produced its chips, developed them in-house, and informed investors of final chip sales. Other American semiconductor companies, such as NVIDIA and AMD, design their chips but outsource their production to Asian foundries, most commonly Taiwan’s TSMC.
Under CEO Pat Gelsinger, Intel unveiled a strategy to investors that would see it continue to make its processors while building an external foundry to make chips for other companies.
As the Verge reports, in light of CEO Pat Gelsinger’s remarks to investors, all the losses are not so unexpected. These latest numbers are partly the result of Intel’s past missteps in the foundry business. This led to the fact that the microchip manufacturer transferred about 30% of wafer production to other foundry companies, including TSMC, which today is one of Intel’s main competitors.
However, Intel has now decided to use devices for extreme ultraviolet (EUV) from the Dutch company ASML, although it had previously decided not to do so. Gelsinger believes that Intel will reach financial parity by 2027 thanks to the availability of tools.
In addition, ASML claims on its website that its technology enables foundries such as Intel to now more affordably scale the mass production of computer chips.
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