Intel’s foundry business has been hit with significant losses, and the company is struggling to catch up with Taiwan Semiconductor Manufacturing Co.’s profitability. Intel reported operating losses of $7 billion in 2023 compared to $5.2 billion in 2022. Analysts like Bernstein’s Stacey Rasgon predict a challenging few years for the foundry economy.

Despite these challenges, Intel is investing heavily to regain its position as the leading maker of cutting-edge chips. The company’s capital investments under construction were $43.4 billion as of December 31, 2023, up from $36.7 billion a year earlier. In addition, Intel plans to spend $100 billion on factories in the US with the help of the American Chip Act.

Intel CEO Pat Gelsinger predicted that operating losses for the contract chip manufacturing business would peak in 2024 before falling as low as around 2027. The sector represented about 35% of Intel’s total net income in 2023. The company has aiming for the foundry business to achieve a gross margin of approximately 40% by 2030, still behind TSMC’s 53% margin reported in the fourth quarter of 2023. Although Intel’s foundry unit had sales of $18.9 billion in 2023 , TSMC’s revenue reached $19.52 billion in the last three months of the same year

By Samantha Johnson

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