Intel Foundry Ranks 2nd Worldwide? ... Increased Performance Including Own Chips (Comprehensive)

Expansion of Foundry Sales Due to Accounting Changes
Profitability Challenges Emerge to Reduce Deficits
Investment Burden Reduced by US and European Subsidies

Intel has disclosed its performance over the past three years, including chip production under its foundry (semiconductor contract manufacturing) sales. Applying a new accounting method, last year's foundry sales reached $18.9 billion, surpassing Samsung Electronics, which holds the second-largest market share. However, since external customers accounted for only 5% of Intel's foundry sales last year, the achievement is not considered a significant business success. Intel has set a goal to improve foundry performance and increase operating margin to around 30% by 2030.

Intel Aims for Profitability... Targets 30% Operating Margin

On the 2nd (local time), Intel held a webinar to disclose revised performance figures applying the new accounting method. The company upgraded its existing business unit from 'Intel Foundry Services (IFS)' to 'Intel Foundry Group' and changed the sales criteria accordingly. The event was organized to provide recent annual performance data ahead of the official announcement of the updated results later this month. Intel CEO Pat Gelsinger attended the session.

Previously, the company announced that to expand its foundry business, it would include not only sales from external customer orders but also chip sales produced internally in its foundry performance. This change was expected to significantly increase foundry sales, potentially surpassing Samsung Electronics, the industry's second-largest player. This was the reason for the industry's keen attention to the announcement.

Intel revealed that foundry sales under the new standard were $22.849 billion in 2021, $27.491 billion in 2022, and $18.91 billion last year. Comparing sales figures alone, this means Intel already surpassed Samsung Electronics' foundry sales of $13.3 billion last year.

However, internal sales accounted for the majority of last year's total sales at $17.957 billion. External sales were only $953 million, representing a 5% share. This is viewed more as an attempt to inflate figures rather than a meaningful increase in business revenue. Intel positively evaluated the business, noting that although internal sales decreased last year, external sales increased by $579 million year-over-year due to packaging revenue growth.

The foundry operating loss continued to grow, reaching $5.067 billion in 2021, $5.169 billion in 2022, and $6.955 billion last year. As a latecomer in the foundry market chasing Taiwan's TSMC and Samsung Electronics, Intel faces significant challenges in improving profitability.

CEO Gelsinger set a goal to become the second-largest foundry player by external customer sales by 2030 and to achieve operating margin targets in the meantime. He also announced plans to improve operating margin through future technological leadership, stabilization of investment costs, and pursuit of capital efficiency. Intel aims to achieve a non-GAAP gross margin of 40%, an operating margin of 30%, and external customer sales exceeding $15 billion by 2030.

Pat Gelsinger, Intel CEO, is introducing recent foundry performance and business plans through a webinar on the 2nd (local time). /

The company expects subsidies received from the U.S. and Europe to help reduce the overall investment scale. Currently, Intel has secured $19.5 billion in subsidies and loan support in the U.S. and anticipates benefits exceeding $25 billion through tax reductions. CEO Gelsinger explained, "Subsidies exceeding $10 billion have also been confirmed in Israel, Ireland, Germany, and Poland."

"14A Process Will Improve Power, Performance, and Cost"

CEO Gelsinger explained that delays in adopting extreme ultraviolet (EUV) lithography equipment caused the U.S. and Western countries to fall behind Asian competitors. He emphasized, "This is why we are responding with IDM 2.0." Earlier, Intel announced the 'Integrated Device Manufacturer (IDM) 2.0' strategy in 2021 to expand its foundry business. He also stated that through IDM 2.0, Intel will continue Moore's Law, adding, "We will also promote Moore's Law advancements in advanced packaging." He explained that increasing external foundry orders is the foundation of the IDM 2.0 strategy.

Intel plans to complete manufacturing preparations for the 18A (1.8-nanometer class) process by the end of the year as previously announced. CEO Gelsinger said that five external customers have been secured for the 18A process and about 50 test chips are underway. Regarding the 14A (1.4-nanometer class) process, he emphasized, "We will be the first to introduce High NA (next-generation EUV equipment) and lead in all aspects including power, performance, and cost." He also mentioned that Intel is strengthening cooperation with Taiwan's UMC and Israel's Tower Semiconductor for legacy process businesses.

Meanwhile, Intel announced the appointment of Lorenzo Florens as the Chief Financial Officer (CFO) of the Foundry Group on the same day.

This content was produced with the assistance of AI translation services.