Operating Loss of $7 Billion Reported by Intel’s (NASDAQ:INTC) Foundry Business

Intel recently reported a significant increase in operating losses for its Foundry business. In 2023, the company’s Foundry business is expected to experience an operating loss of $7 billion, compared to $5.2 billion in the previous year. Intel aims to achieve break-even operating margins by 2030, with expectations for its Foundry business to experience its highest operating losses in 2024. However, within the next seven years, Intel anticipates reaching 40% non-GAAP gross margins and 30% non-GAAP operating margins.

To support its turnaround efforts, Intel plans to invest $100 billion in constructing and expanding chip factories in four U.S. states. This initiative is crucial for the company to attract clients and showcase its manufacturing capabilities. By investing in new facilities, Intel hopes to improve its production capacity and efficiency, which will ultimately lead to higher profitability.

On Wall Street, analysts have a consensus Hold rating on Intel stock, with seven Buys, 24 Holds, and four Sells assigned in the past three months. Despite a 35% increase in its share price over the past year, the average price target for INTC stock stands at $46.60 per share, indicating a 6.05% upside potential. While some investors may be concerned about the potential risks associated with investing in technology companies during this time of economic uncertainty, others see Intel’s investment plan as a positive sign that it is committed to improving its performance and competitive position within the industry.

Overall, while Intel’s Foundry business is facing significant challenges at present, the company’s investment plan suggests that it is taking proactive steps to address these issues and improve its long-term outlook. By expanding its production capacity and increasing efficiency through new investments in technology infrastructure, Intel aims to achieve greater profitability and maintain its position as a leading player in the global semiconductor market.

In summary, Intel recently reported an increase in operating losses for its Foundry business due to various factors such as supply chain disruptions and increased competition from other chipmakers such as AMD and NVIDIA Corporation (NVDA). The company aims to achieve break-even margins by 2030 but expects significant losses until then due to increased competition from other players.

To support this effort towards achieving profitability, Intel has announced plans to invest $100 billion towards constructing new chip factories across several US states such as Arizona, Oregon Oregon State University (OSU), Texas New Mexico State University (NMSU) and Idaho Boise State University (BSU). These investments aim at improving production capacity and efficiency while attracting clients by showcasing manufacturing capabilities.

Despite recent challenges faced by intellectual property disputes between China’s Semiconductor Manufacturing Company Limited (SMIC) versus American semiconductor companies such as Micron Technology Inc., Xilinx Inc., Advanced Micro Devices Inc., NVIDIA Corporation (NVDA), Altera Corp., Texas Instruments Incorporated (TI) etc., Analysts on Wall Street have given Intel a consensus hold rating with seven buys assigned over the past three months while keeping their average price target at $46

By Aiden Johnson

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