Intel’s chip manufacturing unit will post cumulative operating losses of $7 billion in 2023, Reuters reported on Tuesday. That’s a significant increase from the $5.2 billion it lost in 2022, and while 2023 revenue was $18.9 billion, the figure was down 31% from the $27.49 billion the year before.
However, the total loss wasn’t entirely surprising, based on CEO Pat Gelsinger’s comments to investors. Gelsinger said these latest numbers are partly the result of Intel’s past mistakes in catching up on its foundry business, which led the chipmaker to outsource about 30% of its entire wafer production to other foundries, such as Intel’s current One of its biggest competitors is TSMC.
But now Intel has invested in using extreme ultraviolet (EUV) machines from Dutch company ASML, something it had previously decided not to do. Gelsinger expects the cost-effectiveness of these tools to help Intel break even by 2027. ASML also said on its website that its technology enables chip foundries such as Intel to more economically scale up mass production of computer chips.
It sounds like Intel may have made the right decision just in time. Intel plans to spend a total of about $100 billion to build or expand its chip foundries in four states. It will also receive up to $8.5 billion in U.S. government funding as part of the new CHIPS Act. But for everything to go as planned, Intel needs to convince companies to use its chip manufacturing services. Microsoft recently signed on as a foundry customer, but it’s unclear how many more companies Intel will need in a few years to break even (as planned).