Intel has disclosed a $7 billion operating loss for its foundry business in 2023, which is a wider loss compared to the previous year. The company reported sales of $18.9 billion for its foundry business in 2023 which is 31% less from $27.49 billion in the year 2022.
These losses were primarily attributed to past decisions, slow adoption of advanced chip-making technologies, and challenges in maintaining competitiveness in the semiconductor industry. In addition to that, Intel also faced difficulties related to the collapse of the client market, with reduced demand for PCs and servers, leading to a decline in client revenue in 2023.
Intel's historical lack of innovation and progress in its product stack, including limited advancements in CPU performance and pricing competition, further impacted the financial performance of its foundry business. Competitors like TSMC have made significant advancements in chipmaking capabilities and Intel's failure to foresee the significance of the mobile market and its missed opportunities in smartphone chip production also played a role in its declining market share and financial struggles.
Despite past setbacks and slow adoption of advanced chip-making technologies, Intel is investing heavily to catch up with key competitors like TSMC and Samsung Electronics. The company plans to invest $100 billion in building or expanding chip factories in the U.S. as part of its business turnaround strategy. Intel is also focusing on attracting external companies to utilize its manufacturing services.
Intel currently outsources around 30% of its total number of wafers to external contract manufacturers like TSMC, which is part of the misstep Intel had earlier taken. However, Intel CEO Pat Gelsinger said that the company aims to reduce this to approximately 20%. The company has also transitioned to using EUV (extreme ultraviolet) tools, which are more cost-effective and competitive in terms of price and performance.
Despite the losses, Intel aims to continue investing in its foundry business, with plans to break even on an operating basis by around 2027.
Via Reuters
6 Comments - Add comment