Shares of Intel dropped by 4% in extended trading after the company disclosed financials for its foundry business in an SEC filing. The foundry business recorded an operating loss of $7 billion in 2023 on sales of $18.9 billion, wider than the $5.2 billion loss in 2022 on $25.7 billion in sales. This is the first time Intel has revealed revenue from its foundry business, historically designing and manufacturing its own chips. Other American semiconductor companies like Nvidia and AMD design chips but outsource manufacturing to Asian foundries.
Intel’s plan under CEO Patrick Gelsinger involves continuing to make its own processors while starting an external foundry business to manufacture chips for other companies. The company’s role in cutting-edge semiconductor manufacturing on American soil secured nearly $20 billion in CHIPS act funding. Most of Intel’s foundry revenue currently comes from its own operations, and the newly-organized Products division reported $11.3 billion in operating income on $47.7 billion in sales in 2023. Intel expects foundry losses to peak in 2024 and break even by 2030.
Intel anticipates considerable earnings growth from its foundry business over time, with Gelsinger stating that 2024 is the trough for foundry operating losses. The lack of profitability in the foundry business is attributed to past decisions and slow adoption of EUV technology. The company previously announced Microsoft as a customer for its foundry services and has $15 billion in foundry revenue already booked. By restructuring its products division to account for foundry costs, Intel aims to position itself for sustained profitability and growth in the semiconductor market.
