Santa Clara, California – Intel Corp. revealed that its factory revenue is on the decline, with losses widening as the company navigates the challenges of an ambitious expansion plan. The semiconductor giant reported a decrease in sales and an increase in operating losses for its new division, Intel Foundry, as part of its recent filing.
Intel Foundry, responsible for the company’s manufacturing operations, saw sales drop from $27.5 billion in the prior year to $18.9 billion in 2023. The operating loss at the division also widened to $7 billion from $5.2 billion in 2022. These financial results shed light on the hurdles facing the company amid CEO Pat Gelsinger’s turnaround efforts.
Gelsinger’s strategy includes giving Intel Foundry more autonomy to produce chips for other companies. By providing a more detailed financial breakdown, Intel aims to position the division for profitability by the midpoint between now and the end of 2030. The appointment of Lorenzo Flores as CFO of Intel Foundry reflects the company’s dedication to this transformation.
Despite the challenges, Intel remains optimistic about its future prospects. The company anticipates 2024 to be the peak of its losses, with Intel Foundry expected to achieve profitability on an operating level within the next decade. However, the recent financial disclosures have had a negative impact on Intel’s stock performance, with shares falling over 2% in extended trading.
One of Intel’s most significant transformations is its foray into outsourced chip production, known as the foundry industry. This shift is aimed at reclaiming the technological edge the company once held. However, competition in the market remains fierce, with Taiwan Semiconductor Manufacturing Co. (TSMC) leading the foundry sector and surpassing Intel in revenue.
TSMC reported sales of $69.4 billion in 2023, with projections of further growth in 2024. In contrast, Intel’s closest competitor, Advanced Micro Devices Inc., saw revenue of $22.7 billion last year. Nvidia Corp. has also emerged as a dominant player in the industry, particularly in the artificial intelligence accelerator market.
Intel’s massive expansion efforts in the US and Europe, supported by government incentives, are crucial to its future success. While the company faces financial pressures in manufacturing, Gelsinger’s early wins in attracting clients to the foundry business, such as Microsoft Corp., provide a glimmer of hope amid the challenges. Intel continues to push forward in its quest to regain its competitive edge and drive improvement in its operations.