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Intel disclosed that its foundry business experienced increasing operating losses, with $7 billion in losses for 2023 compared to $5.2 billion the previous year. The unit’s revenue also dropped by 31% to $18.9 billion in 2023. This news caused Intel shares to drop by 4.3% following the regulatory filing. CEO Pat Gelsinger stated that 2024 would be the year of worst operating losses for the chipmaking business but expects to break even by around 2027.

Gelsinger attributed the foundry business’s struggles to past decisions, such as not using extreme ultraviolet (EUV) machines from ASML. These machines, despite their high cost, offer significant advantages over older technologies. Intel has since transitioned to using EUV machines, which will improve production capabilities as older systems are phased out. Gelsinger expressed confidence in Intel’s competitiveness in the chipmaking industry post-EUV adoption.

To support its turnaround plan, Intel plans to invest $100 billion in building or expanding chip factories in four U.S. states. The company aims to attract external partners to use its manufacturing services. As part of this strategy, Intel will now report the results of its manufacturing operations as a standalone unit. This move reflects Intel’s commitment to catching up with Taiwan Semiconductor Manufacturing Co., its primary chipmaking competitor.

This shift towards using EUV machines and investing in new factories aligns with Intel’s goal to enhance manufacturing capabilities and improve competitiveness in the market. Gelsinger outlined this strategy during an investor presentation, emphasizing the importance of these investments in achieving profitability. By focusing on advanced technologies and expanding production capacity, Intel aims to position itself as a leader in the chipmaking industry.

Intel’s commitment to reshaping its foundry business and regaining competitiveness is evident in its significant investments and strategic decisions. As the company transitions to using EUV machines and expands its manufacturing capabilities, it seeks to address past challenges and drive growth in its chipmaking operations. By targeting a break-even point by 2027 and emphasizing a focus on innovation and efficiency, Intel aims to secure its position as a key player in the semiconductor industry.

The challenges faced by Intel’s foundry business underscore the competitive nature of the semiconductor industry and the need for continuous innovation and strategic investments. Moving forward, Intel’s focus on leveraging advanced technologies, expanding manufacturing capabilities, and attracting external partners will be crucial in driving its long-term success and competitive position in the market. As Intel works towards achieving profitability and reestablishing its leadership in the chipmaking space, its commitment to growth and innovation will be key drivers of its future success.

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