Intel Slides as Foundry Business Loss Spotlights Wide Gap with Rival TSMC

The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, US, October 2, 2020. (Reuters)
The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, US, October 2, 2020. (Reuters)
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Intel Slides as Foundry Business Loss Spotlights Wide Gap with Rival TSMC

The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, US, October 2, 2020. (Reuters)
The logo for the Intel Corporation is seen on a sign outside the Fab 42 microprocessor manufacturing site in Chandler, Arizona, US, October 2, 2020. (Reuters)

Intel shares fell nearly 7% on Wednesday, as ballooning losses at its contract chip-making business signaled the company could take years to catch up with the profitability of rival Taiwan Semiconductor Manufacturing Co.

Disclosing new financials details for its foundry unit on late Tuesday, Intel said the business posted operating losses of $7 billion in 2023 compared with $5.2 billion in 2022.

"We expected foundry economics to be bad, and they truly are," said Bernstein analyst Stacy Rasgon. "We likely have several years of substantial headwinds still in front of us."

Intel is set to lose more than $12 billion in market value if the losses hold.

The company has been spending billions of dollars to return as the dominant maker of cutting-edge chips, a position that it lost to Taiwan Semiconductor Manufacturing Co., which is now the world's biggest contract chipmaker.

The US chipmaker's capital investments classified as "construction in progress" totaled $43.4 billion as of Dec. 30, 2023, compared with $36.7 billion a year earlier.

Intel also plans to spend $100 billion on plants across four states in the United States, in part helped by funding from the US Chips Act.

CEO Pat Gelsinger said operating losses for its contract chip-making business would peak in 2024 before breaking even by about 2027. It accounted for about 35% of Intel's total net revenue in 2023.

Intel expects the foundry business to have a gross margin of about 40% by 2030, which would still trail the 53% margin TSMC reported for the fourth quarter of 2023.

At T$625.5 billion ($19.52 billion) in just the final three months of the 2023, TSMC's revenue is also much larger than the $18.9 billion in sales Intel's foundry unit had in 2023.

"The incumbents' geographic and talent advantages, as well as their established rolodex of tier-1 customers, have jolted investor confidence in Intel's foundry prospects," said Parv Sharma, a senior analyst at research firm Counterpoint.



Apple Names Insider Sabih Khan as COO

The Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020. (Reuters)
The Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020. (Reuters)
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Apple Names Insider Sabih Khan as COO

The Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020. (Reuters)
The Apple logo is seen on the Apple store at The Marche Saint Germain in Paris, France July 15, 2020. (Reuters)

Apple on Tuesday named insider Sabih Khan as its chief operating officer, taking over from Jeff Williams, as part of a long-planned succession.

Khan, who has been with Apple for 30 years and is currently the senior vice president of operations, will take on the new role later this month, the iPhone maker said in a statement.

Before joining Apple's procurement group in 1995, he worked as an applications development engineer and key account technical leader at GE Plastics.

Williams will continue to report to CEO Tim Cook and oversee the company's design team and Apple Watch.

The design team will report directly to Cook after Williams retires late in the year.