Intel shares fall amid $7 billion operating loss in foundry business

Intel shares were down 4% at one point in extended trading on Tuesday after the company disclosed long-awaited financials for its semiconductor manufacturing business, commonly called a foundry business, in an SEC filing.

Intel said its foundry business posted an operating loss of $7 billion in 2023 on sales of $18.9 billion. That’s a bigger loss than the $5.2 billion Intel reported in its foundry business in 2022 on $27.5 billion in sales.

This is the first time Intel has disclosed total revenue for its foundry business alone. Historically, Intel has both designed and manufactured its own chips and reported final chip sales to investors. Other US semiconductor companies such as Nvidia and AMD design their chips but send them to Asian foundries – often Taiwan’s TSMC – for production.

Intel is pitching investors under Chief Executive Officer Patrick Gelsinger a plan to continue making its own processors but also start an outside foundry business to make chips for other companies. Intel’s role as one of the only American companies to make cutting-edge semiconductors on American soil was a big reason it secured nearly $20 billion in CHIPS and Science Act funding last month.

Much of Intel’s foundry revenue currently comes from its own operations, the chip maker said on Tuesday. Intel also restated its product divisions to account for its costs as if it were a so-called “factory-free” company that had to account for foundry as an expense.

Intel said the newly reorganized product division, which mainly consists of PC and server processors, reported $11.3 billion in operating income on $47.7 billion in sales in 2023.

Intel said on Tuesday it expects its foundry losses to peak in 2024 and eventually reach profitability “in the middle” between that quarter and the end of 2030. The company previously said Microsoft would use its foundries services and that there are $15 billion in foundry revenue already booked.

“Intel Foundry will drive significant earnings growth for Intel over time. 2024 is the bottom for the foundry’s operating losses,” Gelsinger said on a call with investors on Tuesday.

Intel said in a promotional video that much of the lack of profitability for its foundry business was due to “the weight of past decisions,” and separately, Gelsinger cited the past “slow” adoption of a technology called EUV, which is used to make the most advanced chips.

Clarification: This story has been updated to reflect the correct 2022 Intel foundry operating segment earnings.