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

Intel’s chip-making division faced significant challenges in 2023, with the company reporting a loss of $7 billion in operating costs. This marked a substantial increase from the $5.2 billion lost in 2022 and was 31 percent lower than the year before, when Intel made $27.49 billion. Despite generating $18.9 billion in revenue in 2023, this figure was not enough to offset the losses and Intel’s CEO Pat Gelsinger acknowledged that the losses were not unexpected.

The CEO attributed these losses to past mistakes catching up with the company’s foundry business. To address this issue, 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, which 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. Microsoft has recently become a foundry customer for Intel and 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 and Gelsinger understands this fully. He has acknowledged that Intel needs to attract new customers and retain current ones if it wants to remain competitive in the industry.

In conclusion, Intel’s chip-making division faced significant challenges in 2023 but there are indications that things may improve with strategic investments and partnerships with other companies like ASML and Microsoft becoming foundry customers for their services. It remains uncertain whether it will be able to break even by 2027 but with continued efforts towards innovation and expansion into new markets, it is possible that they may achieve their goal sooner rather than later

By Sophia Gonzalez

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