Intel Corp on Tuesday said that losses have deepened at its chip manufacturing operations and the business might not break even for several years.
Intel Foundry, a new division of the company responsible for manufacturing, had sales of US$18.9 billion last year, down from US$27.5 billion the previous year, Intel Corp said.
The operating loss at the new unit widened to US$7 billion from US$5.2 billion.
Photo: Reuters
Intel Corp is giving a more detailed picture of its finances as part of an ambitious turnaround plan by chief executive officer Pat Gelsinger.
He is breaking out the results from the factory network as a step toward having it operate more independently. The business is seeking to make chips for other companies, and giving it some separation from the rest of Intel is vital to that strategy.
“We believe this transparency and accountability is needed,” Gelsinger said during a presentation. “The required transformation is well under way.”
The company expects this year to be the peak of its losses and that Intel Foundry would be profitable, on an operating level, “midway between now and the end of 2030,” he said.
The chipmaker also named Lorenzo Flores as chief financial officer of the division.
Intel’s push into outsourced chip production — known as the foundry industry — is one of the company’s biggest transformations in its history. Gelsinger’s comeback effort also includes restoring Intel Corp’s once-unassailable technology edge — something that the chip pioneer lost in the years before he took the reins in 2021 — by next year.
That would improve the capabilities of Intel’s products and make them cheaper to manufacture. It would also allow the company to win orders from competitors, something that would provide as much as US$15 billion in sales by the end of 2030, he said.
Intel said there are five such companies committed to using its latest production technique, called 18A.
It is to become more widely used starting next year and gather momentum after that, the company said.
Taiwan Semiconductor Manufacturing Co (台積電) dominates the foundry market and has eclipsed Intel in overall revenue. It posted sales of US$69.4 billion, net income of US$26.9 billion and gross margin of 54 percent last year. Sales this year are projected to expand 20 percent to US$83.4 billion.
Intel has embarked on a record-setting expansion of its factories in the US and Europe, taking advantage of government incentives such as the US’ CHIPS and Science Act.
However, even with that support, it is an expensive undertaking that has put investors on edge.
Intel Corp chief financial officer Dave Zinsner, who joined Gelsinger in taking questions from analysts on Tuesday, acknowledged that there is plenty of room for improvement.
However, separating out the manufacturing group — and treating the company’s product division as a customer — has already yielded benefits, Zinsner said.
There has been a huge reduction in expensive requests for expedited work and test chips, he said.
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