Intel’s Foundry Finances Unveiled

Intel’s foundry business is set to mark a significant milestone by reporting its first quarter as a separate division within Intel for the Q1 2024 quarter. This move comes as part of the company's strategic efforts to streamline operations and enhance transparency in its financial reporting.

According to the new financial model applied to previous years' results, the foundry operation generated revenues of $18.9 billion last year, resulting in a loss of $7 billion. This figure represents a decline from the 2022 revenues of $27.5 billion, when the loss stood at $5.2 billion. The company is optimistic about the future trajectory of its foundry business despite the current financial challenges.

CEO Pat Gelsinger has outlined a roadmap for the foundry business, indicating that 2024 is expected to witness the peak of losses, with a projected turnaround towards profitability around 2027. This strategic vision aims to position Intel's foundry division as a key player in the semiconductor industry, leveraging its technological capabilities and market expertise.

CFO Dave Zinsner emphasized the transformative impact of the new financial model, stating, “This model is designed to unlock significant cost savings, operational efficiencies, and asset value. As it begins to take hold, we expect to accelerate on our path toward achieving our ambition of 60% non-GAAP gross margins and 40% non-GAAP operating margins in 2030."

Gelsinger highlighted Intel's unique position in the market, stating, “Intel’s differentiated position as both a world-class semiconductor manufacturer and a fabless technology leader creates significant opportunities to drive long-term sustainable growth across these two complementary businesses.” The implementation of the new model signifies a crucial step in Intel's IDM 2.0 transformation, aimed at enhancing operational efficiency and market competitiveness.

Addressing Intel's past challenges in the process technology race, Gelsinger attributed the company's setbacks to delays in adopting EUV technology. He noted, “In the post EUV era, we see that we’re very competitive now on price, performance back to leadership, and in the pre-EUV era we carried a lot of costs and were uncompetitive.” Intel's strategic realignment and focus on innovation are poised to drive future success in the semiconductor industry.