Intel's chipmaking division posted an operating loss 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 it generated $18.9 billion in revenue in 2023, that number is down 31 percent from the $27.49 billion it generated the year before.
However, based on CEO Pat Gelsinger's comments to investors, the overall loss isn't a complete surprise. Gelsinger says these latest numbers are partly a result of Intel's past mistakes in catching up with its foundry business, which led the chipmaker to outsource about 30 percent of its total chip production to other foundries, such as TSMC, one of Intel's biggest competitors currently.
But now Intel has invested in usage Extreme ultraviolet (EUV) machines. From the Dutch company ASML, when it had previously decided not to do so. Gelsinger expects the cost-effectiveness of these tools to help Intel break even by 2027. ASML also says on its website that its technology makes scaling up the mass production of computer chips within reach of chip foundries like Intel.
Intel seems to have made the right decision at the right time. In total, Intel plans to spend about $100 billion to build or expand its chip foundries in four states. It will also receive up to $8.5 billion in funding from the US government, as part of the new CHIPS Act. But for everything to go according to plan, Intel will need to convince companies to use its chip manufacturing service. Microsoft recently signed on as a foundry customer, but it's unclear how many more companies Intel will need to break even (as planned) within a few years.
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