Intel recently disclosed revenue totals for its foundry business for the first time in history. Traditionally, Intel has both designed and manufactured its own chips, reporting final chip sales to investors. In contrast, companies like Nvidia and AMD design their chips and then send them overseas to foundries, often in Taiwan’s TSMC, for manufacturing.
Under CEO Patrick Gelsinger, Intel has been presenting a plan to investors where the company will continue to produce its own processors while also starting an external foundry business to manufacture chips for other companies. Intel’s notable position as one of the few U.S. companies engaging in cutting-edge semiconductor manufacturing on American soil played a significant role in securing nearly $20 billion in funding from the CHIPS and Science Act last month.
At present, a large percentage of Intel’s foundry revenue comes from its internal operations. To provide a clearer financial picture, Intel has restructured its Products division to account for foundry as a cost, much like a “fabless” company would. This restructuring led to the division reporting $11.3 billion in operating income on $47.7 billion in sales in 2023.
Intel stated that it anticipates its foundry’s losses to reach their peak in 2024 and eventually break even between the current quarter and the end of 2030. Gelsinger mentioned that Microsoft would be utilizing Intel’s foundry services and that the company already has $15 billion in foundry revenue booked.
Gelsinger expressed optimism about the future earnings growth for Intel from its foundry business, noting that 2024 would be the lowest operating loss point for the foundry. The lack of profitability in the foundry business was attributed to past decisions, including a slow adoption of EUV technology, cited as a factor by Gelsinger.
