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Intel Discloses $7 Billion Operating Loss For Chip-Making Unit - Slashdot

 1 month ago
source link: https://tech.slashdot.org/story/24/04/02/2250236/intel-discloses-7-billion-operating-loss-for-chip-making-unit
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Intel Discloses $7 Billion Operating Loss For Chip-Making Unit

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Intel on Tuesday disclosed $7 billion in operating losses for its foundry business in 2023, "a steeper loss than the $5.2 billion in operating losses the year before," reports Reuters. "The unit had revenue of $18.9 billion for 2023, down 31% from $63.05 billion the year before." From the report: Intel shares were down 4.3% after the documents were filed with the U.S. Securities and Exchange Commission (SEC). During a presentation for investors, Chief Executive Pat Gelsinger said that 2024 would be the year of worst operating losses for the company's chipmaking business and that it expects to break even on an operating basis by about 2027. Gelsinger said the foundry business was weighed down by bad decisions, including one years ago against using extreme ultraviolet (EUV) machines from Dutch firm ASML. While those machines can cost more than $150 million, they are more cost-effective than earlier chip making tools. Partially as a result of the missteps, Intel has outsourced about 30% of the total number of wafers to external contract manufacturers such as TSMC, Gelsinger said. It aims to bring that number down to roughly 20%. Intel has now switched over to using EUV tools, which will cover more and more production needs as older machines are phased out. "In the post EUV era, we see that we're very competitive now on price, performance (and) back to leadership," Gelsinger said. "And in the pre-EUV era we carried a lot of costs and (were) uncompetitive."

So (Score:5, Interesting)

by Luckyo ( 1726890 ) on Tuesday April 02, 2024 @09:38PM (#64365416)

My understanding is that when Gelsinger came on board, one of the first things he did was get in touch with ASML and order a whole batch of their latest gen machines. Which take a while to deliver, and even longer to configure for Intel's designs.

Add to this the fact that Intel isn't really competitive with AMD in CPU department and only getting started with discrete GPUs way behind Nvidia and AMD... It makes sense that it will take years to catch up, and until then Intel has to invest a lot of money into its fabs and chip designs to become competitive (again in CPUs, and first time ever in discrete GPUs). But if Intel is successful, they may actually have the advantage of having the newest ASML machines, which should be more efficient than ones TSMC is using without burdens of having to operate legacy EUV systems in parallel with newest ones.

We'll see how it goes, but at the very least Intel got off the "minimizing the costs" train and back onto "we need to try to be industry leaders, and that means investing a lot".

  • Re:

    There are multiple tiers for cpu and gpu. Intel still holds the top of,the x86 cpu market. They were never ever ever ever competitive in gpu. Their gpus are suitable for light office work though in machines without discrete gpus.

    So what do you mean by competitive? Raw speed? Performance/watt? Performance/price? Total units shipped? Something else?

    • Re:

      We are sitting in this weird spot that business-class desktop machines that are a decade old can still perform adequately to meet the needs of the user short of things like gaming.

      I suspect that the biggest issues are in enterprise computing on virtual machine platforms where both CPU density (and associated heat) and GPU density have become core elements.

  • What does "competitive" mean? If we're talking stock price appreciation, then Nvidia and AMD are leaving Intel in the dust. If we're talking benchmarks or reviews or Slashdot fandom, Intel is once again behind. If we're talking market share, then AMD has never been competitive with Intel, in any CPU segment. It's not even close. In fact, if we're talking market share and not benchmarks for GPUs, AMD hasn't been close to competitive with Nvidia for a decade. In terms of GPU market share, AMD is much cl

    • Re:

      Market share is meaningless when your margins are in the toilet.

      • Re:

        Mmmmmmmm... They said that about Amazon for quite a few years before its margins improved and it surfaced triumphantly with a near-monopoly.

        Jeff Bezos didn't get nearly $200 billion from a loss-making business.

  • Re:

    Industry leaders that are conducting basic research should be developing their own manufacturing equipment to produce chips using those revolutionary processes/scales that are supposed to be a major component of being industry leaders.

    That they're buying machines for their flagship products indicates that they're no longer the leaders they used to be. It would be one thing if they ended up buying machines for expanding their legacy products offerings simply because their own in-house machines are worn out

    • Re:

      What are you talking about? ASML has dominated the semiconductor field for years. TSMC, Samsung, and Intel all depend on them.

    • Re:

      Not necessarily. Every manufacturing process needs specialized machines to produce parts and some companies offer unique (and expensive) best-of-breed machines. For example, if a company is doing metal CNC work they may have a very expensive Tormach milling machine. However, a company might see there is a cost saving by purchasing a larger, faster, more precise 5-axis milling machine [lagunatools.com] if they can justify the volume and precision upgrade.

      Same with Intel. They can probably produce chips in-house down to ab

  • Re:

    Where do you see evidence for any of that? TSMC has multiple fabs with more coming online every year. There's no indication that they're struggling with newer EUV equipment. Intel isn't moving to anything truly revolutionary anytime soon anyway since they scrapped their plans to utilize high NA EUV for 20a and 18a.

    Gelsinger keeps making claims about catching up to and even surpassing TSMC, but from what I can see it appears that he's full of bullshit. Intel 4 is used in the rather disappointing Meteor La

  • Re:

    All Intel ever had was better manufacturing. Remember Intel came from memory, CPUs were a side-show for them for a long time. AMD, on the other hand, grew making signal processors. Since the ASML machines cannot give Intel an edge over the competition, and they never had anything else, really, than their manufacturing process (and a whole lot of scummy tactics and willfully let their customers get hit by a known security risk), I guess Intel is pretty much done for. Of course, giants die slowly.

  • Maybe now US and European chip fabs can step up.

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