Intel suffered a setback when it revealed growing operating losses for its foundry division on Tuesday. Taiwan Semiconductor Manufacturing has been gaining ground on Intel in terms of technology.
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 was $18.9 billion, a 31% decrease from $27.49 billion the previous year.
Following the filing of the filings with the U.S. Securities and Exchange Commission (SEC), Intel shares fell 4.3%.
During an investor presentation, Chief Executive Pat Gelsinger stated that the company’s chipmaking division would incur its largest operating losses in 2024. He also mentioned that the division anticipates achieving operating break-even by roughly 2027.
According to Gelsinger, the foundry industry was hindered by poor choices, such as the decision made a year ago not to use extreme ultraviolet (EUV) machinery made by the Dutch company ASML. Even though those devices can cost over $150 million, they are still more affordable than the instruments used in the past to make chips.
Due to the company’s mistakes, Intel has contracted out roughly 30% of its overall wafer production to outside manufacturers like TSMC, as stated by Gelsinger. This strategy aims to address operational challenges and enhance efficiency in semiconductor production. It seeks to reduce that figure to about 20%.
As previous computers are phased out, Intel has now shifted to employing EUV tools, which will cover an increasing amount of production demands.
“In the post EUV era, we see that we’re very competitive now on price, performance (and) back to leadership,” Gelsinger stated. “And in the pre-EUV era we carried a lot of costs and (were) uncompetitive.”
In four US states, Intel intends to invest $100 billion in the construction or expansion of semiconductor facilities. Convincing outside businesses to use its manufacturing services is a key component of its business turnaround plan.
Intel informed investors that part of that approach included starting to report manufacturing operations’ performance as a separate entity. To overtake its main competitors in the semiconductor industry, TSMC and Samsung Electronics Co Ltd., the corporation has been making significant investments.
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