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Intel reports $7 billion operating loss at chip manufacturing unit

Intel disclosed operating losses at its foundry business as it attempts to regain its lead in the chipmaking industry.

The multinational company disclosed the figures on Tuesday (April 2), Reuters reported. The manufacturing unit is reported to have an operating loss of $7 billion in 2023. The year before, losses were $5.2 billion.

The segment’s revenue in 2023 will be $18.9 billion, down 31% from $27.49 billion in 2022.

CEO Pat Gelsinger reportedly said at an investor presentation that 2024 will be the worst year for operating losses in the company’s chip manufacturing business, and it is expected to achieve operating profits and losses by around 2027 balance.

She went on to say that the foundry business had been weighed down by bad decisions, including opposing the use of extreme ultraviolet (UEV) machines from Dutch company SML a year ago. The machines cost more than $150 million.

As older machines are phased out, the move to EUV tools should cover more production needs.

The Foundry currently has an expected lifetime transaction value of more than $15 billion with external customers, and the company said it “remains focused on its goal of becoming the world’s second-largest foundry by 2030.”

Provides $8.5 billion in direct funding to Intel to advance semiconductor development

The news follows an announcement in March of $8.5 billion in direct funding for Intel’s semiconductor business. The U.S. government will also provide $11 billion in loans in the hope of re-establishing the U.S.’s leadership in semiconductor manufacturing.

The government investment comes from the Chip and Science Act and will be used to build or expand chip factories in four U.S. states. These include Chandler, Arizona, Rio Rancho, New Mexico, New Albany, Ohio, and Hillsborough, Oregon.

The funding from the U.S. government, combined with funding that Intel has proposed over the next five years, marks one of the largest investments ever announced in U.S. semiconductor manufacturing.

If all goes according to plan, more than 10,000 manufacturing jobs and nearly 20,000 construction jobs will be created as a direct result of the investment.

Featured Image: Photo by Christian Wiediger on Unsplash

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