Intel Financial Update Shows Losses at Factories Widened in 2023
(Bloomberg) -- Intel Corp. said that revenue from its factories is declining and losses are widening, showing the challenges of an expensive expansion plan.
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Intel Foundry, a new division of the company responsible for its manufacturing operations, had sales of $18.9 billion in 2023, down from $27.5 billion the prior year, the company said in a filing Tuesday. The operating loss at the new division widened to $7 billion from $5.2 billion in 2022.
Intel is giving a more detailed picture of its finances as part of a turnaround plan by Chief Executive Officer Pat Gelsinger. He’s breaking out the results from the factory network as a step toward having it operate more independently. The business is seeking to make chips for other companies, and giving it some separation from the rest of Intel is vital to that strategy.
The company expects 2024 to be the peak of its losses and that Intel Foundry will be profitable, on an operating level, “midway between now and the end of 2030.” The chipmaker also named Lorenzo Flores as chief financial officer of Intel Foundry.
Intel shares fell more than 2% in extended trading. They had been down 1.3% to $43.94 in regular trading, bringing its year-to-date drop to 13%.
Intel’s push into outsourced chip production — known as the foundry industry — is one of the company’s biggest transformations in its history. Gelsinger’s comeback effort also includes restoring Intel’s once-unassailable technology edge — something that the chip pioneer lost in the years before he took the reins in 2021.
Taiwan Semiconductor Manufacturing Co. currently dominates the foundry market and has eclipsed Intel in overall revenue. That company had 2023 sales of $69.4 billion and net income of $26.9 billion. Its gross margin — the percentage of sales remaining after deducting the cost of production — was 54%. And its sales are projected to expand 20% in 2024 to $83.4 billion.