Intel’s Chip Crisis Deepens: $7 Billion Loss, Fab Delays

Over the past two years, Intel has been investing in the construction of semiconductor fabrication plants, with plans to establish four fabs across Ohio in the United States and Germany. However, these projects have encountered numerous delays. Recent media reports reveal that Intel’s chip manufacturing division suffered a staggering $7 billion loss in 2023, marking a significant increase from the $5.2 billion deficit in 2022. Intel’s revenue for 2023 was $18.9 billion, a decline of approximately 31% from $27.94 billion the previous year.

Nevertheless, Intel’s CEO Pat Gelsinger anticipated this substantial loss, attributing part of the deficit to past missteps in Intel’s foundry services, which led to outsourcing 30% of its intended in-house wafer fabrication to other manufacturers, including its biggest rival, TSMC.

Intel has commenced investments in Dutch company ASML’s extreme ultraviolet (EUV) lithography machines, with plans to equip its German factories with EUV technology. Gelsinger anticipates that by 2027, the cost-effectiveness of EUV lithography will assist Intel in achieving financial equilibrium. According to ASML, their EUV technology will enable Intel to mass-produce chips more economically.

Moreover, Intel is poised to receive up to $8.5 billion in government subsidies under the United States CHIPS Act, providing much-needed support. However, to fully reverse its current financial downturn, Intel must persuade more companies to entrust their chip production to them. Microsoft is already known to be one of Intel’s clients.