Intel’s chip manufacturing segment suffered a $7 billion loss in the previous year

In 2023, Intel’s chip-making division faced significant challenges, accumulating a loss of $7 billion in operating costs. This was a substantial increase from the $5.2 billion lost in 2022 and marked a 31 percent decrease from the $27.49 billion made in 2022. Despite generating $18.9 billion in revenue in 2023, this was still lower than the previous year when Intel made $18.9 billion.

CEO Pat Gelsinger acknowledged that the losses were not unexpected but attributed them to past mistakes affecting the company’s foundry business. To address this issue, Intel outsourced around 30 percent of its wafer production to other foundries such as TSMC, a key competitor. However, Intel has now made a strategic investment in using extreme ultraviolet (EUV) machines from ASML, which Gelsinger believes will help the company break even by 2027.

ASML’s technology is touted as making mass production of computer chips more cost-effective for companies like Intel, potentially signaling a positive shift for the chipmaker. In support of its goals, Intel plans to invest around $100 billion in building or expanding its chip foundries across four states with up to $8.5 billion in funding from the U.S government under the new CHIPS Act. Microsoft has recently become a foundry customer for Intel; however, there is uncertainty about how many more companies will need to be onboarded for Intel to achieve its break-even target in the coming years.

Successfully persuading companies to use its chipmaking services will be crucial for Intel’s future success.

Intel faces significant challenges with its chip-making division due to past mistakes catching up with its foundry business, resulting in significant losses and decreased revenue compared to previous years.

To address these issues, Intel has outsourced around 30 percent of its wafer production and invested heavily in extreme ultraviolet (EUV) machines from ASML.

The success of these strategies remains uncertain as Microsoft has only recently become a foundry customer for Intel and there is no guarantee that other companies will follow suit.

However, if successful, these investments could have a positive impact on the future success of Intel and contribute to breaking even by 2027.

In conclusion, Intel faces significant challenges with its chip-making division due to past mistakes affecting their foundry business but has taken steps to address these issues through outsourcing and investing heavily in EUV technology from ASML.

The success of these strategies remains uncertain as Microsoft has only recently become a foundry customer for Intel and there is no guarantee that other companies will follow suit.

By Samantha Johnson

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