One of the three pillars of Intel's comeback strategy, which it calls IDM 2.0, is to offer its foundry services to fabless companies. In the past, Intel used its fabs exclusively for its own chips, and now it wants to compete with rivals TSMC and Samsung in the global foundry market. As always with these sorts of large-scale endeavors, it's not cheap to attempt to compete in this market, and now we know exactly how much it cost Intel so far.
The company held a webinar yesterday to discuss its foundry operations with investors and industry analysts, revealing for the first time that it's been a money pit for the company and that the bleeding won't stop soon. According to a summary from Reuters, Intel disclosed that it lost $5.2 billion on its foundry business in 2022, and that number jumped to $7 billion in 2023. Intel expects that number to increase even further in 2024 when it believes the losses will peak. Looking forward, it expects to break even somewhere around 2027.
According to CEO Pat Gelsinger, one of the biggest headwinds facing its foundry division was its much-delayed decision to transition to extreme ultraviolet lithography machines (EUV). The company was famously the last of the big fabs to move to EUV for its Intel 4 process in September 2023, four years behind its rivals Samsung and TSMC. Gelsinger hopes to correct this misstep by being the first fab to switch to high-NA lithography. The company recently announced it was already assembling the world's first high-NA machine at its Oregon fab.
Gelsinger said one byproduct of poor decision-making in the past is that it still needs to buy wafers from other companies, most notably from its biggest rival, TSMC. He said the company is currently outsourcing up to 30% of its wafers but has a goal to reduce that number to around 20% in the years ahead. Its recent move to EUV lithography will help it with that effort as it seeks to shut down older machines and transition its manufacturing lines to newer technologies.
