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

Intel reported significant losses at its contract chip-making business on Wednesday, causing its shares to drop 5%. This revelation suggests that the company may take years to catch up with the profitability of Taiwan Semiconductor Manufacturing Co. The news comes as Intel releases new financial details for its foundry unit, reporting operating losses of $7 billion in 2023 compared to $5.2 billion in 2022. Analysts expect several years of challenges ahead for the foundry economics, according to Bernstein’s Stacy Rasgon.

Despite this setback, Intel continues to invest heavily in reclaiming its position as a leading producer of cutting-edge chips after losing ground to TSMC. As of December 30, 2023, Intel’s capital investments under “construction in progress” amounted to $43.4 billion, up from $36.7 billion the previous year. Additionally, the company plans to spend $100 billion on plants in the U.S., with assistance from the U.S. Chips Act.

Intel’s CEO, Pat Gelsinger, believes that operating losses for the contract chip-making business will peak in 2024 before breaking even around 2027. This sector accounted for about 35% of Intel’s total net revenue in 2023. Gelsinger aims for the foundry business to achieve a gross margin of approximately 40% by 2030, still behind TSMC’s 53% margin reported in Q4 of 2023. Although Intel’s foundry unit had sales of $18.9 billion in 2023, TSMC’s revenue reached $19.52 billion in the final three months of the same year.

Gelsinger acknowledged past decisions like not using extreme ultraviolet (EUV) machines from ASML had impacted the foundry business negatively. However, Intel has since transitioned to utilizing EUV tools.

The struggle faced by Intel reflects the fierce competition in this crucial sector and highlights how quickly technology can change and impact a company’s bottom line.

In conclusion, despite significant losses at its contract chip-making business and challenges ahead for foundry economics, Intel remains committed to investing heavily and regaining its position as a leading producer of cutting-edge chips after losing ground to TSMC

By Aiden Johnson

As a content writer at newspoip.com, I have a passion for crafting engaging and informative articles that captivate readers. With a keen eye for detail and a knack for storytelling, I strive to deliver content that not only informs but also entertains. My goal is to create compelling narratives that resonate with our audience and keep them coming back for more. Whether I'm delving into the latest news topics or exploring in-depth features, I am dedicated to producing high-quality content that informs, inspires, and sparks curiosity.

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