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Intel reinvents in semiconductor industry amid US$7 billion loss

In recent years, Intel has embarked on a bold and transformative journey to reclaim its position as a leader in semiconductor technology. This ambition is embodied in the creation and expansion of its Foundry business division, a strategic pivot aimed at not only recapturing lost ground against rivals like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics but also establishing Intel as a pivotal player in the global chip manufacturing landscape.

Despite facing significant financial challenges, Intel’s leadership under CEO Patrick Gelsinger has laid out a comprehensive roadmap for resurgence and growth.

Intel’s strategic pivot in the semiconductor space
The operational challenges facing Intel’s Foundry business have been stark. In 2023, the division reported operating losses of US$7 billion, a notable increase from US$5.2 billion the year prior, alongside a 31% drop in revenue. These figures, reflective of the intense competition and rapid technological evolution in the semiconductor industry, have prompted a strategic reassessment at Intel, as noted by Reuters.

Amid these financial headwinds, Intel has undertaken significant structural and strategic shifts. One of the most critical moves has been the separation of manufacturing costs from the broader product development expenses on the income statement, creating a distinct category for Intel Foundry. This accounting realignment aims to provide a clearer picture of the foundry’s performance and the impact of production costs on Intel’s overall financial health.

At the heart of Intel’s strategy is a deep commitment to technological innovation and excellence. The company has announced ambitious plans to introduce five semiconductor process nodes over four years, a rapid pace of development aimed at leapfrogging competitors. A key focus is the advanced 18A technology, positioned as Intel’s counter to TSMC’s 3-nanometer node. With strong demand and several customer commitments already in place, the 18A technology represents a significant bet on Intel’s future in chip manufacturing.

Intel’s pivot to extreme ultraviolet (EUV) chip manufacturing technologies marks another critical aspect of its strategy. After initial hesitations that contributed to operational losses and competitive disadvantages, the adoption of EUV technology is expected to dramatically improve cost efficiency and product performance. This shift addresses past missteps and positions Intel favorably in the “post-EUV era,” as CEO Gelsinger highlighted.

Despite the current challenges, Intel’s outlook is optimistic. The company has outlined a path to break even by 2027, driven by efficiencies from EUV technology, reduced reliance on external contract manufacturers, and a growing portfolio of customer commitments. Intel’s ambitious investment of US$100 billion in expanding U.S. chip manufacturing facilities underscores its commitment to recovery and long-term dominance in the foundry space. Tech Wire Asia

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