Intel Faces $7B Losses In Foundry Business, Aims For Break-Even By 2027
Portfolio Pulse from Benzinga Neuro
Intel Corporation (NASDAQ:INTC) reported a $7 billion operating loss for its foundry business in 2023, a significant increase from the previous year's $5.2 billion loss. Revenue for the unit dropped 31% to $18.9 billion. Shares fell 4.3% following the disclosure. CEO Pat Gelsinger anticipates the worst losses in 2024 but aims for a break-even by 2027. The company's strategic missteps included not adopting EUV machines from ASML (ASML) earlier. Intel plans to reduce outsourcing to companies like TSMC and invest $100 billion in U.S. chip factories.
April 03, 2024 | 12:40 pm
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Intel Corporation reported a significant increase in operating losses for its foundry business, with a 31% drop in revenue and a 4.3% fall in share price following the announcement.
The substantial increase in operating losses and the significant drop in revenue for Intel's foundry business directly impact investor sentiment and the company's financial health, leading to a negative short-term impact on INTC's stock price.
CONFIDENCE 90
IMPORTANCE 95
RELEVANCE 100
NEUTRAL IMPACT
Intel's CEO acknowledged the strategic mistake of not adopting EUV machines from ASML earlier, which has now been corrected as Intel shifts to using these more cost-effective tools.
While Intel's acknowledgment of a strategic mistake regarding ASML's EUV machines may raise questions about past decisions, the correction of this course and adoption of EUV technology is a positive step forward. However, the immediate impact on ASML's stock is likely neutral as the market has already absorbed the dynamics of EUV technology adoption.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60
NEUTRAL IMPACT
Intel plans to reduce its outsourcing to external contract manufacturers like TSMC from 30% to about 20%, as it shifts towards using more cost-effective EUV tools and expands its U.S. manufacturing capabilities.
Intel's decision to reduce outsourcing to TSMC could have a neutral impact on TSMC's stock in the short term, as the reduction is gradual and TSMC has a diversified client base. The move reflects Intel's strategy to bolster its manufacturing capabilities, which may not immediately affect TSMC's financials or stock price.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50