Intel's foundry business lost 7 billion US dollars in 2023, and fell by more than 4% after the market

wallstreetcn ·  Apr 3 07:38

Source: Wall Street News

$Intel (INTC.US)$It was first revealed on Tuesday that its foundry business losses increased in 2023, down 31% year on year.

On Tuesday, April 2, Intel disclosed financial data for 2023 in a filing with the SEC. According to the data, the company's total revenue declined from 57 billion US dollars in 2022 to 47.7 billion US dollars in 2023.

By sector, the revenue of the data center and AI division fell from US$16.86 billion in 2022 to US$12.64 billion in 2023.

Intel's foundry revenue fell from $27.5 billion in 2022 to $18.9 billion in 2023. At the same time, the division's operating losses are also growing, rising from $5.2 billion in 2022 to $7 billion.

Some analysts pointed out that due to market concerns about Intel's short-term decline in performance and the prospects of the foundry business, its stock price fell by more than 4% after the market, with a cumulative decline of 13% from the beginning of the year to date.

However, Intel is confident that the company's long-term profit will improve. Looking ahead, Intel aims to achieve an adjusted gross margin of 30% and an adjusted operating margin of 30%. By the end of 2030, Intel wants to achieve 60% non-GAAP gross margin and 40% adjusted operating margin.

Intel is committed to strategic transformation and enters the wafer foundry business

According to reports, Intel's entry into outsourced chip production (that is, the foundry industry) is one of the biggest transformations in the company's history. In response, Intel is supporting the company's strategic transformation through measures such as increasing financial transparency and improving business independence.

Intel CEO Pat Gelsinger emphasized that the company is committed to providing more detailed financial information to increase external transparency and enhance investor and market confidence in Intel. Intel also announced that Lorenzo Flores has been appointed Chief Financial Officer of Intel Foundry.

Additionally, Gelsingerr plans to separate the foundry business from the rest of the company's business. The move aims to reinforce Intel Foundry's core strategy of providing foundry services to external customers, and marks Intel's transformation from its traditional business model of designing and selling its own chips.

Despite current business challenges, Intel is optimistic about Intel Foundry's long-term profitability. The company expects operating losses in the foundry business to peak in 2024, and plans to reach break-even between 2024 and 2030.

While Intel is actively transforming, it is also facing the foundry business$Taiwan Semiconductor (TSM.US)$$Advanced Micro Devices (AMD.US)$und$NVIDIA (NVDA.US)$Wait for strong competitors.

Currently, TSMC dominates the foundry market, and its total revenue has surpassed Intel. In 2023, TSMC's total revenue reached US$69.4 billion, net profit of US$26.9 billion, and gross margin of 54%. Furthermore, TSMC expects its total revenue to grow 20% in 2024 to reach US$83.4 billion.

Meanwhile, Intel's main competitor in its traditional business area is AMD, which had total revenue of US$22.7 billion in 2023, net profit of US$854 million, and gross margin of 50%. Analysts forecast that the company's total revenue will grow 14% this year.

Furthermore, Nvidia has rapidly risen to become a leader in the industry. Although its revenue has yet to reach the level of TSMC, its sales have doubled last year, and it is expected to grow significantly again this year. Moreover, Nvidia has an overwhelming leading position in the AI accelerator market.


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