Intel reportedly proves to be lagging behind the chip-making industry boom after the tech giant reported an approximately $7 billion operating loss in its chip-making unit for 2023. Following the filing of the paperwork with the U.S., Intel shares fell 4.3%.
Compared to the $5.2 billion in operating losses the previous year, Intel said that the manufacturing unit's operating losses for 2023 were $7 billion, a more substantial loss. In 2023, the unit's sales were $18.9 billion, a 31% decrease from $27.49 billion the previous year.
(Photo : Photo by FABRICE COFFRINI/AFP via Getty Images) A photograph taken during the World Economic Forum (WEF) annual meeting in Davos on January 18, 2024, shows the logo of Intel, the US semiconductor company.
In an investor presentation, Chief Executive Pat Gelsinger stated that the company's chipmaking division would have its largest operating losses in 2024 and that it anticipates operating break-even by roughly 2027.
This is reportedly the first time Intel has released the complete revenue for its foundry division on its own. In the past, Intel has manufactured its own chips, designed them internally, and informed investors of the final chip sales. Other US-based semiconductor firms, like Nvidia and AMD, design their chips but outsource their production to Asian foundries, most frequently Taiwan's TSMC.
Under CEO Patrick Gelsinger, Intel has been presenting a strategy to investors in which it would continue to produce its CPUs while simultaneously establishing an outside foundry to produce chips for other businesses.
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Intel's Expected Losses
According to the Verge, in light of CEO Pat Gelsinger's remarks to investors, the entire loss proves not to be entirely unexpected.
These most recent figures, according to Gelsinger, are partly the consequence of Intel's past missteps catching up with its foundry business.
This led to the chipmaker outsourcing approximately thirty percent of its wafer production to other foundries, including TSMC, which is today one of Intel's major rivals.
However, Intel has now decided to use extreme ultraviolet (EUV) devices from the Dutch company ASML, despite previously choosing not to. By 2027, Gelsinger believes Intel will have achieved financial parity because of the tools' affordability.
Additionally, ASML claims on its website that chip foundries such as Intel can now more affordably scale up the mass manufacture of computer chips thanks to its technology.
Intel's U.S. Chip-Making Deal
Just lately, Intel and the U.S. unveiled plans to award Intel up to $8.5 billion for commercial semiconductor initiatives under the CHIPS and Science Act by the Department of Commerce.
The program intends to support U.S. semiconductor production, R&D, and manufacturing, especially in advanced semiconductor technologies. The only American company designing and producing state-of-the-art logic circuits, Intel, gains a lot from this proposed financing.
The money will go toward supporting research and development as well as semiconductor manufacturing initiatives at Intel's sites in Oregon, Arizona, New Mexico, Ohio, and Washington.
These are the locations where the corporation is in charge of creating cutting-edge chips and semiconductor packaging technologies.
Combining the money from the CHIPS Act with Intel's current intentions to invest over $100 billion in the United States over five years makes this one of the largest public-private partnerships in the country's semiconductor industry.
It is anticipated that this investment will strengthen U.S. supply chains, create thousands of new job opportunities and construction jobs, support U.S.-based research and development, and bolster American leadership in cutting-edge semiconductor production and technology.
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(Photo: Tech Times)
