That’s not an inconsiderable sum of money and suggests that the company’s foundry business is going to find it extremely tough to compete with and regain a technological lead over the likes of TSMC.
That loss follows a $5.2bn operating loss the year before, while revenues for the business tumbled by 31 per cent to $18.9bn for 2023 from $27.49bn in 2022.
According to Chief Executive Pat Gelsinger Intel expects its foundry business to break even by 2027 but warned that 2024 would see increased operating losses for the company's chipmaking business.
Why the mounting losses? Well, Gelsinger conceded that a number of bad decisions were responsible for the loss highlighting the decision not to use extreme ultraviolet (EUV) machines from Dutch firm ASML. The decision was based on cost as these machines are expensive, at more than $150 million each, but they are more cost-effective than earlier chip making tools.
As a result, Intel has been forced to outsource upwards of 30% of its wafers to external contract manufacturers such as TSMC.
Gelsinger said that Intel was aiming to bring that number down to roughly 20% which will be helped by the decision to use EUV tools. Using these new machines, it will be possible to raise production levels as older machines are phased out.
Intel is set to spend $100 billion on building or expanding chip factories in four US states, but encouraging more companies to use its manufacturing services will be critical. It has been investing heavily in key manufacturing technologies as it looks to catch-up and compete with the likes of TSMC and Samsung Electronics.
So, will 2024 prove to be the peak year of losses for Intel’s foundry business?
