Intel shares fall on $7 billion operating loss at its foundry business

Intel Corporation Shares fell 4% at one point in extended trading Tuesday after the company disclosed long-awaited financials for its semiconductor manufacturing business, commonly called its 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 loss Intel reported for its foundry business in 2022 on sales of $27.5 billion.

This is the first time Intel has disclosed total revenue from its foundry business alone. Historically, Intel has designed its own chips, manufactured them itself, and reported final chip sales to investors. Other American semiconductor companies, such as Nvidia and AMD, design their own chips but send them to Asian foundries — often Taiwan's TSMC — to manufacture them.

Intel has been pitching to investors under CEO Patrick Gelsinger about a plan where it will continue to make its own processors, but will also start an outside foundry business to make chips for other companies. Intel's role as one of the only U.S. companies manufacturing cutting-edge semiconductors on American soil was a big reason it received nearly $20 billion in CHIPS and Science Act funding last month.

Chipmaker Intel said Tuesday that most of Intel's foundry revenue currently comes from its own operations. Intel also reworked its product divisions to report its costs as if it were a so-called “fabless” company that had to count foundry as a cost.

The newly organized product division, which primarily consists of computer and server processors, generated operating revenue of $11.3 billion on sales of $47.7 in 2023, Intel said.

Intel said on Tuesday that it expects its foundry losses to peak in 2024 and then eventually break even “midway” between this quarter and the end of 2030. The company previously said Microsoft will use its foundry services, and that it has 15 $1 billion in foundry revenue has already been booked.

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

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

Clarification: This story has been updated to reflect correct 2022 Intel Foundry operating segment revenue.