Intel shares fall after company reveals $7 billion operating loss in foundry business

Intel
shares
fell
4%
at
one
point
in
extended
trading
on
Tuesday

after
the
company
revealed
long-awaited
financials
for
its
semiconductor
manufacturing
business,
commonly
called
the
foundry
business,
in
a
SEC
filing.

Intel
said
its
foundry
business
recorded
an
operating
loss
of
$7
billion
in
2023
on
sales
of
$18.9
billion.
That’s
a
wider
loss
than
the
$5.2
billion
Intel
reported
in
its
foundry
business
in
2022
on
$27.5
billion
in
sales.

This
is
the
first
time
that
Intel
has
disclosed
revenue
totals
for
its
foundry
business
alone.
Historically,
Intel
has
both
designed
its
own
chips
as
well
as
done
its
own
manufacturing,
and
reported
final
chip
sales
to
investors.
Other
American
semiconductor
companies
such
as
Nvidia
and
AMD
design
their
chips
but
send
them
off
to
Asian
foundries
—
often
Taiwan’s
TSMC
—
for
manufacturing.

Intel
has
been
pitching
investors
under
CEO
Patrick
Gelsinger
on
a
plan
where
it
would
continue
to
make
its
own
processors,
but
would
also
start
an
external
foundry
business
to
make
chips
for
other
companies.
Intel’s
role
as
one
of
the
only
U.S.
companies
doing
cutting-edge
semiconductor
manufacturing
on
American
soil
was
a
big
reason
why
it
secured
nearly
$20
billion
in
CHIPS
and
Science
Act
funding
last
month.

Much
of
Intel’s
foundry
revenue
currently
comes
from
its
own
operations,
the
chipmaker
said
on
Tuesday.
Intel
also
restated
its
products
divisions
to
report
its
costs
as
if
it
were
a
so-called “fabless”
company
that
has
to
account
for
foundry
as
a
cost.

Intel
said
the
newly
organized
Products
division,
which
mainly
consists
of
processors
for
PCs
and
servers,
reported
$11.3
billion
in
operating
income
on
$47.7
in
sales
in
2023.

Intel
said
on
Tuesday
that
it
expected
its
foundry’s
losses
to
peak
in
2024
and
eventually
break-even “midway”
between
this
quarter
and
the
end
of
2030.
The
company
previously
said
that
Microsoft
would
use
its
foundry
services,
and
that
it
has
$15
billion
of
revenue
for
foundry
already
booked.

“Intel
Foundry
is
going
to
drive
considerable
earnings
growth
for
Intel
over
time.
2024
is
the
trough
for
foundry
operating
losses,”
Gelsinger
said
on
a
call
with
investors
on
Tuesday.

Intel
said
in
a
promo
video
that
much
of
the
lack
of
profitability
for
its
foundry
business
was
due
to
the “weight
of
past
decisions,”
and
separately,
Gelsinger
cited
the
company’s
past “slow”
adoption
of
a
technology
called
EUV,
which
is
used
to
make
the
most
advanced
chips.

Clarification:
This
story
has
been
updated
to
reflect
the
correct
Intel
foundry
operating
segment
revenue
for
2022.