[ad_1]
(Reuters) – Intel shares rose to 5 before the bell on Wednesday as losses in its contract chip manufacturing business ballooned, suggesting it could take years for the company to catch up to Taiwan Semiconductor Manufacturing’s profitability. % fell.
Intel late Tuesday released new financial details for its foundry division, announcing that the business had an operating loss of $7 billion in 2023, compared to $5.2 billion in 2022.
“We expected economic conditions for foundries to worsen, and they have,” said Bernstein analyst Stacey Rasgon. “We still have potentially several years of significant headwinds ahead of us.”
If pre-market losses continue, Intel will lose more than $9 billion in market capitalization.
The company has spent billions of dollars trying to regain its position as the dominant maker of cutting-edge chips that it lost to Taiwan Semiconductor Manufacturing Co., Ltd., now the world’s largest contract chipmaker.
The company’s capital expenditures classified as “under construction” totaled $43.4 billion as of December 30, 2023, compared to $36.7 billion in the same period last year.
Intel also plans to spend $100 billion on factories across four U.S. states, with funding from the American Chip Act.
CEO Pat Gelsinger said operating losses for the contract chip manufacturing business will peak in 2024 and break even around 2027. This will account for approximately 35% of Intel’s total net revenue in 2023.
Intel expects gross margins for its foundry business to be around 40% by 2030, still below the 53% margins reported by TSMC in the fourth quarter of 2023.
In the last three months of 2023 alone, TSMC’s revenue was NT$625.5 billion ($19.52 billion), much larger than Intel’s foundry division’s 2023 revenue of $18.9 billion.
Gelsinger said the foundry business had been hurt by past missteps, such as a previous decision to use extreme ultraviolet (EUV) equipment from Dutch company ASML. Intel is now switching to EUV tools.
(1 dollar = 32.0490 Taiwan dollar)
(Reporter Arsheeya Bajwa in Bangalore; Editing by Arun Koyyur)
[ad_2]
Source link
