• Thu. Apr 18th, 2024

Intel’s Contract Chip-Making Struggles: How Intel is Investing to Reclaim Its Position in the Market

BySamantha Jones

Apr 3, 2024
Intel’s Slide in Stock Value Highlights Gap with Rival TSMC in Foundry Business Loss.

Intel’s shares fell 5% before the bell on Wednesday after revealing significant losses at its contract chip-making business, indicating that the company may take years to catch up with the profitability of Taiwan Semiconductor Manufacturing Co. This news comes as Intel discloses new financial details for its foundry unit, reporting operating losses of $7 billion in 2023 compared to $5.2 billion in 2022. Analysts like Bernstein’s Stacy Rasgon anticipate several years of challenges ahead for the foundry economics.

Intel has been investing heavily to reclaim its position as a leading producer of cutting-edge chips after losing ground to Taiwan Semiconductor Manufacturing Co. The U.S. chipmaker has capital investments under “construction in progress” amounting to $43.4 billion as of December 30, 2023, up from $36.7 billion the previous year. Additionally, Intel plans to spend $100 billion on plants in the U.S., with assistance from the U.S. Chips Act.

Intel’s CEO, Pat Gelsinger, projected that operating losses for the contract chip-making business would peak in 2024 before breaking even around 2027

By Samantha Jones

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