SANTA CLARA, Calif. Tuesday, April 09, 2024 – Intel Corporation’s chipmaking business, the Client Computing Group (CCG), reported a significant operating loss of $7 billion in 2023, according to a Reuters report on April 9, 2024. This figure marks a substantial increase from the $5.2 billion loss recorded in 2022. 1
The current predicament of the company is attributed to past outsourcing choices, yet Intel’s CEO reassures that the company will achieve breakeven by 2027.
The financial setback coincides with ongoing challenges in the semiconductor industry, including supply chain disruptions and intensified competition. Additionally, CEO Pat Gelsinger acknowledged that “past missteps” contributed to the losses. These missteps included limited investment in advanced chipmaking technologies and a reliance on outsourcing wafer production, with roughly 30% going to competitors like TSMC.
However, Intel has outlined a revised strategy to address these issues. The company is now investing heavily in extreme ultraviolet (EUV) lithography machines from ASML, a technology previously disregarded. Gelsinger believes the cost-efficiency of EUV tools will enable Intel’s CCG to achieve breakeven by 2027. This aligns with ASML’s public statements on their website, which highlight the economic benefits of EUV technology for chip foundries.
Intel’s strategic shift is coupled with significant capital expenditure plans. The company intends to invest roughly $100 billion in building or expanding chip factories across four U.S. states. Additionally, the CHIPS Act, a recent federal act, could provide Intel with up to $8.5 billion in government funding.
Despite these plans, securing sufficient customers for its foundry services remains crucial for Intel’s success. While Microsoft has recently signed on as a client, the exact number of customers needed to achieve breakeven remains unclear.
- Intel’s Chipmaking Arm: https://www.theverge.com/2024/4/2/24119454/intels-chipmaking-business-7-billion-loss[↩]
