According to a report by Reuters on Tuesday, Intel’s chip-making division faced operating losses totaling $7 billion in 2023.
This figure marks a significant increase from the $5.2 billion loss reported in 2022. Despite generating $18.9 billion in revenue during 2023, the division experienced a notable decline of 31% compared to the $27.49 billion revenue generated the previous year.
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CEO Pat Gelsinger’s remarks to investors provided insight into the situation, suggesting that the accumulated losses should not come as a complete surprise. Gelsinger attributes these latest figures, in part, to the consequences of Intel’s past missteps catching up with its foundry business. Consequently, the chipmaker had to resort to outsourcing approximately 30% of its wafer production to other foundries, including TSMC, a significant competitor in the industry.
In a significant shift, Intel has decided to invest in utilizing extreme ultraviolet (EUV) machines from Dutch company ASML, a decision it had previously avoided. The CEO anticipates that the cost-effectiveness of these tools will be crucial in enabling Intel to achieve break-even status by 2027.
ASML further emphasizes on its website that its technology facilitates the scalability of computer chip mass production, offering a more economical option for chip foundries such as Intel.
It appears that Intel’s strategic decisions have come at an opportune moment. With plans to invest approximately $100 billion in constructing or expanding chip foundries across four states, coupled with up to $8.5 billion in government funding under the new CHIPS Act, Intel seems poised for a transformative phase.
However, the success of these endeavors depends on Intel’s ability to attract companies to utilize its chipmaking services. While Microsoft has recently committed as a foundry customer, the exact number of additional companies Intel requires to achieve its break-even target within the designated timeframe remains uncertain.
