Intel reveals $7 billion operating loss for chip-making unit: Report
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Intel faced setbacks on Tuesday afterit disclosed an increase in operating losses for its foundry business.
This has led to intensified efforts from the company to regain a competitive edge against rivals like Taiwan Semiconductor Manufacturing (TSMC).
The chipmaker reported operating losses of $7 billion for its manufacturing unit in 2023, a major rise from the $5.2 billion losses incurred the previous year.
Additionally, revenue for the unit fell sharply by by 31 per cent to $18.9 billion in 2023 compared to $27.49 billion in the preceding year.
Following the revelation of the operating losses, Intel's shares witnessed a decline of 4.3 per cent.
The filing of documents detailing the financial performance of the company's chip-making unit with the US Securities and Exchange Commission (SEC) contributed to the negative trend in share prices.
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During an investor presentation, Intel's Chief Executive Officer, Pat Gelsinger, projected 2024 to be the year of peak operating losses for the chip-making business.
However, he said that the company was set to achieve its objective of a break-even on an operating basis by approximately 2027.
Gelsinger attributed the challenges faced by the foundry business to previous decisions, including the reluctance to adopt extreme ultraviolet (EUV) machines from ASML, a decision that proved costly in terms of competitiveness.
In response to the identified missteps, Intel has transitioned to utilising EUV tools, which are expected to gradually replace older machinery as part of the production process.
Gelsinger said that the company was on track with technological transition with its regained competitiveness in terms of price and performance in the post-EUV era.
Intel came up withplans to invest $100 billion in constructing or expanding chip factories across four US states.
The success of its business turnaround strategy relies on attracting external companies to utilise its manufacturing services.
As part of this initiative, Intel will begin reporting the results of its manufacturing operations as a separate unit.
The company's investments aim to bridge the gap between itself and primary chipmaking competitors such as TSMC and Samsung Electronics.
(With inputs from Reuters)