Starting This Year, In-House Chip Production Included in Sales
Foundry Expected to Turn Profitable by 2030
Lorenzo Florence Appointed as Foundry CFO
Intel has disclosed its performance over the past three years, including chip production under its foundry (semiconductor contract manufacturing) sales. Applying the new accounting method, last year's foundry revenue reached $18.9 billion, surpassing Samsung Electronics, the market share second place with $13.3 billion. However, external customers accounted for only 5% of Intel's foundry revenue last year. Market research firms are focusing on whether to apply the new performance standards.
Pat Gelsinger, Intel CEO, explaining the foundry business model applying new accounting standards during a webinar on the 2nd (local time) / On the 2nd (local time), Intel held a webinar and revealed revised performance figures applying the new foundry model. Starting this year, to expand the foundry business, the existing 'Intel Foundry Services (IFS)' will be upgraded to the 'Intel Foundry Group,' and the event was organized to guide the changed accounting method ahead of the earnings announcement at the end of this month. Pat Gelsinger, Intel's Chief Executive Officer (CEO), attended the event.
Intel announced that foundry revenue under the new standard was $22.849 billion in 2021, $27.491 billion in 2022, and $18.91 billion last year. It added that internal sales accounted for the majority at $17.957 billion of total revenue last year, while external sales were $953 million. Although internal sales decreased, external sales increased by $579 million compared to the previous year due to packaging revenue growth, according to the company. The foundry operating loss continued to increase, recording $5.067 billion in 2021, $5.169 billion in 2022, and $6.955 billion last year.
CEO Gelsinger announced plans to improve foundry profitability and turn it profitable. He said Intel aims to become the second-largest foundry in the industry by external customer share by 2030, and during this process, "we will achieve profitability and operating margin somewhere in the middle." He also stated, "Going forward, we will improve operating margins through technology leadership, investment cost stabilization, and capital efficiency." The plan is to achieve a non-GAAP gross margin of 40% and operating margin of 30% by 2030 while increasing external customer revenue by more than $15 billion.
The company expects that subsidies received from the United States and Europe will help reduce the overall investment scale. Currently, Intel has secured $19.5 billion in subsidies and loan support in the U.S., and expects to receive over $25 billion in benefits through tax reductions. CEO Gelsinger explained, "More than $10 billion in subsidies have been confirmed in Israel, Ireland, Germany, and Poland."
On this day, CEO Gelsinger explained that the delay in adopting extreme ultraviolet (EUV) lithography equipment caused the U.S. and Western world to fall behind Asian competitors. He emphasized, "This is why we are responding with IDM 2.0." Previously, Intel announced the 'Integrated Device Manufacturer (IDM) 2.0' strategy in 2021 to expand its foundry business. He also said that through IDM 2.0, Intel will continue Moore's Law, stating, "We will also promote the advancement of Moore's Law 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 18A (1.8-nanometer class) 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 power, performance, and cost in all aspects." For legacy (older) process business, he explained that Intel is strengthening cooperation with Taiwan's UMC and Israel's Tower Semiconductor.
Meanwhile, Intel announced the appointment of Lorenzo Florence as Chief Financial Officer (CFO) of the Foundry Group on this day. The new CFO Florence will start work on the 8th and will report to the company CFO, Dave Zinsner.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
