April 14, 2024 1:23 pm
Intel’s chip manufacturing segment suffered a $7 billion loss in the previous year

Intel’s foundry business faced significant challenges in 2023, resulting in $7 billion in operating losses, an increase from the $5.2 billion lost in 2022. Despite generating $18.9 billion in revenue, this was 31 percent lower than the year before when Intel made $27.49 billion.

CEO Pat Gelsinger acknowledged that the losses were not unexpected and attributed them to past mistakes catching up with the company’s foundry business. To address this issue, Intel opted to outsource around 30 percent of its wafer production to other foundries, including key competitor TSMC. However, Intel has now made a strategic investment in using extreme ultraviolet (EUV) machines from ASML, a move that Gelsinger believes will help the company break even by 2027.

Intel plans to invest around $100 billion in building or expanding its chip foundries across four states, with up to $8.5 billion in funding from the U.S government under the new CHIPS Act. The company is also seeking to attract more customers like Microsoft as a foundry customer for its chipmaking services to achieve its break-even target in the coming years.

ASML’s technology is touted as making mass production of computer chips more cost-effective for companies like Intel, potentially signaling a positive shift for the chipmaker. While there is uncertainty about how many more companies will need to be onboarded for Intel to achieve its break-even target, successively persuading companies to use its chipmaking services will be crucial for Intel’s future success.

Despite facing significant challenges in its chip-making division, Intel has taken strategic steps towards breaking even by investing in new technologies and expanding its operations globally while also seeking new customers for its services.

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