• Wed. Apr 17th, 2024

Intel’s Foundry Struggles with $100 Billion Investment in US Chip Factories

BySamantha Jones

Apr 3, 2024
Intel’s Foundry Business Continues to Suffer from $7 Billion Operating Loss

In 2024, Intel Foundry is expected to face significant losses, with CEO Pat Gelsinger anticipating that the unit may not break even until 2030. Despite this, Intel announced plans to invest $100 billion into chip factories in four US states. The company’s American foundry plans helped secure nearly $20 billion in CHIPS and Science Act funding as the US looks to increase its domestic semiconductor business.

Gelsinger attributed the revenue slide to past missteps, including a decision not to invest in extreme ultraviolet (EUV) machines from Dutch firm ASML. He shared that Intel now buys about 30% of its silicon wafers and emphasized the importance of improving EUV capabilities to bring more production in-house. By doing so, Intel aims to become more competitive in terms of price, performance, and overall leadership.

Intel previously reported that Microsoft would use its foundry services and contribute $15 billion to revenue. However, these assurances did not prevent a 5% drop in Intel’s shares during trading on Wednesday. The company still has a long way to catch up with semiconductor production leader Taiwan Semiconductor Manufacturing (TSMC), which is expected to see sales expand by 20% in 2024 to $83.4 billion.

In an effort towards transparency and accountability, Intel announced it would begin reporting the results of its manufacturing operations as a standalone unit. Gelsinger emphasized the importance of addressing past challenges and moving towards a more successful future for the company.

The loss for Intel Foundry has been significant for several years now, with a $7 billion loss predicted for 2023 alone, adding onto the prior year’s loss of $5.2 billion despite a revenue drop of only 31%. Despite this setback, Intel remains committed to investing heavily into their chip factories in order to increase their domestic semiconductor business and become more competitive in terms of price, performance, and overall leadership.

One major mistake made by Intel was their decision not to invest in extreme ultraviolet (EUV) machines from Dutch firm ASML which hindered their production capabilities. However, Gelsinger emphasizes that they are working on improving their EUV capabilities and bringing more production in-house through buying about 30% of their silicon wafers.

Intel also faced criticism after reporting that Microsoft would use its foundry services but this did not prevent a drop in shares during trading on Wednesday despite contributing $15 billion to revenue.

Despite these challenges, Gelsinger expressed optimism about the future of Intel Foundry while acknowledging additional losses may be expected until it breaks even by 2030.

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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