Intel shares fall after company reveals $7 billion operating loss in foundry business

Intel shares fell 4% at one point in prolonged trading on Tuesday after the corporate revealed long-awaited financials for its semiconductor manufacturing business, commonly called the foundry business, in a SEC filing.

Intel said its foundry business recorded an operating lack of $7 billion in 2023 on sales of $18.9 billion. That’s a wider loss than the $5.2 billion Intel reported in its foundry business in 2022 on $25.7 billion in sales.

This is the primary time that Intel has disclosed revenue totals for its foundry business alone. Historically, Intel has each designed its own chips in addition to done its own manufacturing, and reported final chip sales to investors. Other American semiconductor corporations corresponding to Nvidia and AMD design their chips but send them off to Asian foundries — often Taiwan’s TSMC — for manufacturing.

Intel has been pitching investors under CEO Patrick Gelsinger on a plan where it will proceed to make its own processors, but would also start an external foundry business to make chips for other corporations. Intel’s role as considered one of the one U.S. corporations doing cutting-edge semiconductor manufacturing on American soil was an enormous reason why it secured nearly $20 billion in CHIPS and Science Act funding last month.

Much of Intel’s foundry revenue currently comes from its own operations, the chipmaker said on Tuesday. Intel also restated its products divisions to report its costs as if it were a so-called “fabless” company that has to account for foundry as a value.

Intel said the newly organized Products division, which mainly consists of processors for PCs and servers, reported $11.3 billion in operating income on $47.7 in sales in 2023.

Intel said on Tuesday that it expected its foundry’s losses to peak in 2024 and eventually break-even “midway” between this quarter and the tip of 2030. The company previously said that Microsoft would use its foundry services, and that it has $15 billion of revenue for foundry already booked.

“Intel Foundry goes to drive considerable earnings growth for Intel over time. 2024 is the trough for foundry operating losses,” Gelsinger said on a call with investors on Tuesday.

Intel said in a promo video that much of the shortage of profitability for its foundry business was on account of the “weight of past decisions,” and individually, Gelsinger cited the corporate’s past “slow” adoption of a technology called EUV, which is used to make essentially the most advanced chips.