On April 2nd local time, Intel disclosed in a document submitted to the US Securities and Exchange Commission (SEC) that its new division responsible for chip manufacturing, Intel Foundry, had a revenue of $18.9 billion in 2023, a year-on-year decrease of 31%. In 2022, this figure was $27.49 billion, and operating losses expanded from $5.2 billion the previous year to $7 billion.
Intel CEO Pat Kissinger did not shy away from the losses faced by the business and stated that 2024 will be the year with the most severe operating losses in the company's chip manufacturing business.
At the same time, he also gave a prediction that the business will achieve a balance of operating income and expenses by the end of 2030. At that time, the company's goal is to achieve a gross profit margin of 40% and an operating profit margin of 30% under non US GAAP.
After the above news was released, Intel's closing price on the same day was $43.94 per share, down 4.1% after hours.
As an established semiconductor giant in the United States, Intel has not adopted the popular "Fabless" model in the industry, which is only responsible for chip design and outsources manufacturing to foundries such as TSMC. Instead, it has always adopted the "Integrated Device Manufacturer" (IDM) model, which integrates design and manufacturing.
At an online analyst meeting in June last year, the company disclosed for the first time that it would split its design and manufacturing business in the first quarter of 2024, and the wafer foundry business unit would be completely independent and responsible for its own profits and losses.
In February of this year, at the IFS Direct Connect 2024 conference held in California, Intel announced the official renaming of its wafer business, Intel Foundry Services, to Intel Foundry. The company also publicly showcased the mass production progress of its 1.8nm chip process Intel18A, as well as a process roadmap for the next decade, including the more advanced Intel 14A (corresponding to 1.4nm) process.
According to SEC documents, Intel's business is divided into two parts based on "OEM products", with product departments including Client Computing Division (CCG), Data Center and Artificial Intelligence Division (DCAI), and Network and Edge Division (NEX). OEM, consisting of OEM technology research and development, OEM manufacturing and supply chain, and OEM services, has now become an independent operating department (i.e. Intel Foundry) with its own income statement.
According to the split plan, the independent wafer foundry department will calculate the revenue from external customers and Intel products based on market pricing, as well as the R&D and manufacturing costs previously allocated to the company's product department. According to this arrangement, the profit of Intel's product department will also significantly increase. The company plans to achieve a 60% gross profit margin and a 40% operating profit margin under non-standard accounting standards by the end of 2030.
In addition, Intel's management previously set a goal for its independent wafer foundry business to challenge its main competitors in the chip manufacturing field, namely TSMC and Samsung, and vowed to become the world's second largest foundry by 2030.
To support this ambitious plan, Intel has fully opened up to accepting wafer foundry orders from external customers. "We are willing to contract chips for any company, including our competitor AMD," Kissinger previously publicly urged customers to place orders. At the February conference, both Microsoft and ARM signed a cooperation agreement with Intel on-site, and the company estimated that wafer foundry orders would reach $15 billion, higher than the original expectation of $10 billion.
According to the latest statistics from CounterPoint, an international consulting firm, TSMC ranked first with a market share of 61%, followed by Samsung with a market share of 14%, and Intel in the top ten, but with a market share of less than 1%, there is still a significant gap compared to its competitors.
Two senior industry professionals studying semiconductor manufacturing processes told Interface News reporters that Intel had long lacked presence in the field of chip manufacturing. However, in recent years, its independent wafer foundry business, the acquisition of ASML's most advanced EUV lithography machines, and the promotion of the "four years and five nodes" advanced chip process can still demonstrate the determination of this veteran chip giant to revive chip manufacturing.
In addition, as one of the few chip companies in the United States with manufacturing capabilities, the government's industrial policy support is also an undeniable advantage for Intel.
Last month, the company received a direct funding subsidy of $8.5 billion from the US Chip and Science Act, which may be the largest payment of its kind currently issued under the Chip Act. The company is also eligible to receive $11 billion in federal loans in the future to advance its factory construction in Arizona, New Mexico, Ohio, and Oregon.
In addition, Intel was also included in the first batch of the EU's € 43 billion subsidy plan for the European version of the "Chip Act", and its new factory in Germany, with a total investment of € 30 billion, was the first project to be implemented under the Act.
The above industry insiders analyzed that the chip foundry market has long been concentrated in top manufacturers, and TSMC has almost monopolized the manufacturing of advanced process chips. But as the United States and the European Union successively introduce policies to subsidize the semiconductor industry, the demand from major countries for chip manufacturing supply chains to flow back to the domestic market is increasing, which may reshape the competitive landscape of the global market.
In this context, whether Intel can seize the opportunity to occupy a place deserves long-term attention.