• 2024 will be the worst year of operating losses for the company’s chip manufacturing business, with operating break-even expected by around 2027.
  • Intel has now switched to EUV tools, which will meet more and more production needs as older machines are phased out.

During the week of April 2, Intel revealed that its foundry company was experiencing increasing operating losses. The manufacturing unit reported an operating loss of $7 billion in 2023, which was higher than the $5.2 billion operating loss of the previous year. Revenue for the division in 2023 was $18.9 billion, a 31% decrease from $27.49 billion in the previous year. That is a setback for the industry-leading chip manufacturer.

Loss position

According to Intel, the manufacturing division’s operating loss in 2023 was $7 billion, which was a larger amount than the $5.2 billion operating loss in the previous year. Revenue for the division in 2023 was $18.9 billion, a 31% decrease from $27.49 billion in the previous year. Following the filing with the US Securities and Exchange Commission (SEC), Intel shares decreased by 4.3%.

During an investor presentation, Intel CEO Pat Gelsinger predicted that operating losses in the company’s chip manufacturing division would peak in 2024. The division is projected to break even by around 2027.

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Moving towards new tools

Gelsinger said the foundry business has been dragged down by bad decisions, including opposing the use of extreme ultraviolet (EUV) equipment from Dutch company ASML (ASML.AS) a year ago. While the equipment may cost more than $150 million, it is more cost-effective than earlier chip-making tools. Partly as a result of these missteps, Intel has outsourced about 30 percent of its total wafer count to outside contract manufacturers such as TSMC, Gelsinger said. Intel aims to reduce that figure to about 20 percent. Intel has now switched to EUV tools, which will meet increasing production demands as older machines are phased out.

Intel plans to spend $100 billion on new or expanded chip factories in four US states. Its plan to turn its business around depends on convincing outside companies to use its manufacturing services. The company has been investing heavily to catch up with its main chip-making rivals, TSMC and Samsung Electronics Co.