Intel CEO: Foundry Business Won't be Profitable Until 2030

This week, Intel announced a major financial restructuring for its business, which will see it spin off its foundry operation as a separate business entity. As part of the restructuring, Intel has divulged details about its foundry business for the first time since Pat Gelsinger took the helm in 2021. The new revelations show that its foundry business has been losing billions of dollars since its inception and that the CEO doesn't expect it to turn a profit until 2030.

Intel held a webinar with investors and analysts this week to review the changes to its business, giving Gelsinger a platform to discuss the company's past, present, and future. The top-line announcement was that it was separating its Foundry and Products into two entities, which required divulging the foundry's P&L for the first time in the company's history. In addition to revealing that the foundry business lost $7 billion last year and $5 billion the year before, CEO Gelsinger said he expects it to break even in a few years and eventually be profitable around 2030.

Intel's ambitious "five nodes in four years" strategy will be complete in 2024 with Intel 18A, which is due later this year. Credit: Intel

Gelsinger said the company's IDM 2.0 strategy, which is a three-pronged approach to regain its former glory in the industry, has given it a solid foundation to build toward profitability. Regarding IDM 2.0, Gelsinger stated, "We see this clear path to driving Intel Foundry to break even over the next few years. And what we see as a self-sustaining model with solid returns for Intel Foundry and the consolidated company by 2030," according to a transcript via SeekingAlpha.

Gelsinger also admitted that its slow uptake of extreme ultraviolet lithography (EUV) and lack of investment in its foundry business have resulted in the company playing catch up. Gelsinger summarized what transpired over the past few years in the industry: "The U.S. and the Western world became far behind our Asian peers." He said the response to that clear differential in technology leadership is IDM 2.0, which will culminate this year with the Intel 18A process.

Speaking of the path forward, Gelsinger says Intel is well aware of its past mistakes and will not repeat them. He admitted that the company went to great lengths to avoid using EUV for the Intel 7 process for Alder/Raptor Lake, and ultimately, that decision led to processors that were "deficient in power performance area and cost." That is not the case with its upcoming nodes, including Intel 3 and Intel 18A, according to Gelsinger.