Intel’s $7 Billion Loss in Chip-Making Unit Signals Industry Shift

Intel grapples with a challenging $7 billion chip-making loss under CEO Pat Gelsinger’s leadership, aiming for resurgence amidst production shifts and technology transitions

By Raunak Bose
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Intel’s $7 Billion Chip Making Loss Signals Industry Shift

Intel (Image via Getty Images)

In an announcement that sent the tech industry reeling, Intel dropped a bombshell with revelations of a staggering $7 billion operating loss for its chip-making division in 2023, shaking the very foundations of the tech industry. This reflected a drop from the $5.2 billion losses made in 2022, which certainly do not offer a bright outlook for the semiconductor titan as it continues its uphill struggle to return to the top position in the market that is currently dominated by Taiwan Semiconductor Manufacturing Company (TSMC).

This revelation occurred when Intel saw its manufacturing division revenue plunge by more than 30%, with an amazing $8.5 billion decrease from 2022 to 2023. The tremors of panic rippled through Intel’s investor community as news of a 4.3% decline in the company’s shares reverberated following the disclosure made to the SEC.

CEO Pat Gelsinger’s Strategy to Reshape Intel’s Future Amid Chip-Making Losses

The Chief Executive of Intel, Pat Gelsinger, made this known during a presentation to investors when he revealed the year 2024 as the possible peaking period of the semiconductor business’s operations. Despite acknowledging continued losses in the near future, Gelsinger remains cautiously optimistic, foreseeing a potential turnaround to break even by the year 2027.

Intel CEO, Pat Gelsinger
Pat Gelsinger, CEO of Intel (Image via CNN) 

Gelsinger blamed the problems of the processor manufacturing industry on a group of bad decisions, including the rejection of the ASML EUV machines a year ago. In spite of their pricey nature beyond $150 million, EUV machines are still considered more efficient than the preceding semiconductor devices.

With the burden of outsourced production weighing heavily, Intel found itself outsourcing approximately 30% of its total wafer production to external entities like TSMC, with plans to trim this figure down to 20% in the foreseeable future.

In a strategic shift aimed at altering the course of its fortunes, Intel has embraced EUV technology, slated to supplant outdated methodologies in its manufacturing arsenal, heralding a new era of production processes. Gelsinger further pointed out that through the implementation of EUV technology, Intel is now competitive in both price and performance and thus it has regained its foremost position.

ASML EUV Machines
ASML EUV Machines (Image via Wired) 

In fact, Intel spent billions of dollars on investment plans to build and scale up chip plants across four U.S. states. The future of its newly started business recovery program will be determined by its ability to attract manufacturers around the world to its plants.

Intel is planning to create a separate group within the company, which will be referred to as the Manufacturing Operations (MO) division. The MO will be responsible for tracking and reporting the results of the manufacturing operations.

The huge investments that this firm is making are clearly indicative of its aim to narrow the gap with critical competitors such as TSMC and Samsung Electronics Co Ltd in the highly competitive semiconductor sector.

Overloaded by the need to innovate, and regain the market share, Intel’s future growth trend is hard to predict. Although the company launched a risky investment policy and a revamped technology approach, the company sets its sights on being the industry leader in the semiconductor field.

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