Santa Clara, California – Intel recently disclosed revenue figures solely for its foundry business for the first time, signaling a shift in its transparency to investors. Unlike other American semiconductor companies like Nvidia and AMD that outsource chip manufacturing to Asian foundries, Intel historically both designed and manufactured its own chips.
Under CEO Patrick Gelsinger’s leadership, Intel has been outlining a strategic plan to retain its in-house chip production while venturing into an external foundry business to produce chips for other companies. Intel’s unique position as one of the few American companies engaging in advanced semiconductor manufacturing domestically played a crucial role in securing nearly $20 billion in funding under the CHIPS and Science Act last month.
Intel revealed that a significant portion of its foundry revenue currently stems from its internal operations. The company also restructured its products division to account for foundry costs resembling those of a “fabless” company.
The newly organized Products division, primarily focused on processors for PCs and servers, reported $11.3 billion in operating income from $47.7 billion in sales in 2023. Furthermore, Intel anticipates that its foundry’s losses will peak in 2024 and achieve break-even status between the current quarter and the end of 2030.
During an investor call, Gelsinger expressed optimism about Intel Foundry’s potential to drive substantial earnings growth for the company in the long run. He acknowledged that the lack of profitability in the foundry business was partly a result of past decisions and delayed adoption of electron beam lithography (EUV) technology, crucial for manufacturing advanced chips.
Overall, Intel’s move to diversify its business model by expanding into external foundry services is a strategic shift that aims to capitalize on the growing demand for cutting-edge semiconductor manufacturing. This bold strategy underscores Intel’s commitment to retaining its competitive edge in the semiconductor industry while positioning itself as a key player in the evolving global tech landscape.