Intel Foundry Business Reports $7 Billion Loss in 2023

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Intel's Foundry Services, the chip manufacturing division of Intel Corporation, reported a significant financial loss in fiscal year 2023, with operating losses amounting to $7 billion, an increase from $5.2 billion in the previous year. The division's revenue also saw a decline, dropping 31% to $18.9 billion from $27.49 billion in the prior year. According to Intel's CEO Pat Gelsinger, the increased losses were attributed to strategic missteps, including the delayed adoption of Advanced Semiconductor Materials Lithography (ASML)'s Extreme Ultraviolet (EUV) technology.

Gelsinger anticipates the losses to deepen in 2024, marking what he describes as a nadir for the Foundry business. However, he projects a gradual recovery with the aim for the division to reach a break-even point by 2027. This forecast was shared during an investor presentation where Gelsinger outlined the challenges faced by the Foundry division, notably the costly decision to forego ASML's EUV technology, which, despite its high initial cost exceeding $150 million per unit, offers greater cost efficiency compared to older chip manufacturing technologies.

The shift towards utilizing ASML's EUV technology marks a strategic pivot for Intel Foundry, aiming to enhance its competitiveness against other semiconductor manufacturers. This adjustment comes in the wake of Intel's increased reliance on external chip foundries, such as TSMC, for the production of its chips, with a target to reduce external manufacturing from thirty percent to about twenty percent.

Intel has also revised its reporting approach, now disclosing the Foundry division's financial results separately from the broader corporate earnings. This change offers clearer insights into the division's financial performance, highlighting a significant decrease in revenue from $27.5 billion to $18.9 billion. 

Source: Reuters

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