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

Intel’s Struggles: $7 Billion in Losses and the Quest for Break-Even in the Chip-Making Industry

Intel’s chip-making division faced significant challenges in 2023, accumulating $7 billion in operating losses as reported by Reuters. This marked a substantial increase from the $5.2 billion lost in 2022. Despite generating $18.9 billion in revenue in 2023, this figure was 31 percent lower than the year before, when Intel made $27.49 billion.

CEO Pat Gelsinger acknowledged that the losses were not unexpected, attributing them to past mistakes catching up with the company’s foundry business. To address this, Intel opted to outsource around 30 percent of its wafer production to other foundries, including key competitor TSMC. However, Intel has now made a strategic investment in using extreme ultraviolet (EUV) machines from ASML, a move that 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.

While Microsoft has recently become a foundry customer for Intel, 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 as it looks to overcome its current financial challenges and build a stronger position in the global semiconductor marketplace

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