Intel recently disclosed the financial details of its closely watched semiconductor foundry business in 2023 in a report submitted to the U.S. Securities and Exchange Commission (SEC). The report stated that the business’s operating losses in the past year were as high as US$7 billion, with sales of US$18.9 billion, a sharp decline compared with the previous year’s performance. The news sparked widespread market concern, causing Intel’s stock price to fall in after-hours trading.

This data change shows the serious challenges facing Intel’s foundry business. Compared with 2022, its foundry business sales dropped from US$27.5 billion to US$18.9 billion, and losses expanded from US$5.2 billion to US$7 billion. This trend not only highlights Intel’s weakness in the foundry field, but also deals a blow to its ambition to impact the chip manufacturing position of competitors such as TSMC.

It is worth noting that this is the first time Intel has separately announced comprehensive revenue from its foundry business. Previously, the company had combined revenue from chip design and manufacturing. However, the separate disclosure of data on the foundry business this time may be to more clearly demonstrate its performance in this field and convey its transformation strategy to investors. determination.

Intel CEO Patrick Gelsinger has been actively promoting the company’s foundry business transformation plan. He tried to expand the company’s business scope and improve profitability by opening up external foundry services to provide manufacturing support for other chip design companies. However, judging from the current data, this strategic transformation has obviously not achieved the expected results.

Gelsinger admitted in the report that the company has been too slow in making decisions on technology adoption in the past, especially in the adoption of key technologies such as extreme ultraviolet (EUV) lithography machines. These mistakes not only affected the profitability of the foundry business, but also caused Intel to have to outsource some wafer production to external manufacturers such as TSMC, further increasing costs.

Despite the difficulties, Intel remains optimistic about the future of its foundry business. The company predicts that although 2024 will be the year with the most serious operating losses for the foundry business, it is expected to achieve operating breakeven by around 2027. This forecast is based on the company’s optimistic expectations for future technological innovation and market demand growth, as well as a series of measures the company is taking to reduce costs and optimize operations.

In addition, Intel also revealed some positive signals. It is reported that heavyweight customers such as Microsoft have already booked its foundry services and brought considerable booking revenue to the company. This news undoubtedly injects a boost into Intel’s foundry business and also shows the market’s recognition of Intel’s technical strength and manufacturing capabilities.

However, the market’s reaction doesn’t seem to be entirely buying it. Intel shares fell in after-hours trading after the company disclosed losses from its foundry business. This shows that investors are still cautious about Intel’s future performance in the foundry field, and also reflects the market’s concerns about the overall competitive landscape of the semiconductor industry.

Overall, Intel’s foundry business faces tremendous challenges and pressure in 2023. However, the company remains confident about the future and is taking steps to improve performance. In the future, whether Intel can successfully transform its foundry business and achieve profitable growth will depend on whether it can achieve breakthroughs in technological innovation, cost control, and market expansion.