#记录我的2024#在世界芯片市场上, Intel is undoubtedly a well-known giant, but Intel was recently exposed that the chip foundry business lost $7 billion, what is going on?
1. Intel chip foundry lost $7 billion?
According to a report by Jiemian News, Intel disclosed in a filing with the Securities and Exchange Commission (SEC) that the company's new division responsible for chip manufacturing business, "Intel Foundry", will have revenue of $18.9 billion in 2023, down 31% year-on-year, and this figure will be $27.49 billion in 2022, and the operating loss will widen to $7 billion from $5.2 billion in the previous year.
Intel CEO Pat Gelsinger did not shy away from the losses faced by the business, and said that 2024 will be the worst year for the company's chip manufacturing business to lose money.
At the same time, he also gave a forecast that the business will achieve operating breakeven by the end of 2030, when the company aims to achieve a gross margin of 40% and an operating margin of 30% on a non-GAAP basis.
After the above news, Intel closed at $43.94 per share on the day, down 4.1% after hours. As an old semiconductor giant in the United States, Intel has not adopted the industry's prevalent "fabless" model, that is, only responsible for chip design and outsourcing manufacturing to foundries such as TSMC, but has always adopted the "Integrated Device Manufacturer" (IDM) model that integrates design and manufacturing.
At an online analyst conference in June last year, the company disclosed for the first time that it would split its design and manufacturing business in the first quarter of 2024, and the foundry division would be completely independent and self-financing.
In February this year, at the IFS Direct Connect 2024 conference in California, Intel announced that it would officially change the name of its wafer business, Intel Foundry Services, to Intel Foundry.
2. What happened to the giant Intel?
In the current global chip market, overcapacity has become a problem that cannot be ignored. In this context, many chip companies have fallen into a loss-making situation, even industry giants such as Intel are not immune. Recently, Intel's financial report showed that its chip foundry business lost as much as $7 billion, which attracted widespread attention in the industry. So, what's wrong with Intel and why is it in such a predicament?
First of all, the current global chip market is experiencing cyclical fluctuations, especially in some segments. With the acceleration of technology iteration and the policy incentives of governments to promote the development of the local chip industry, many new wafer factories and chip production lines have been launched, resulting in an imbalance between market demand and supply in the short term. At the same time, changes in consumer demand, especially the slowdown in the smartphone and tablet market, as well as the rapid development of emerging technologies such as artificial intelligence, data centers, and other fields, have changed the demand structure of chip types, and the market demand for traditional mobile chips has weakened, further aggravating the phenomenon of overcapacity in specific fields. Against this backdrop, even an industry giant like Intel is not immune to its own devices, and losses are understandable.
Secondly, unlike the wafer foundry method adopted by other chip companies, Intel has always insisted on producing and manufacturing chips by itself. The benefit of this approach is that Intel has full control over the production line, ensuring product quality and supply stability. At the same time, by avoiding cooperation with external OEMs, Intel also has certain advantages in terms of cost control.
However, this business model also poses significant challenges for Intel. On the one hand, self-produced chips require a lot of capital and manpower to build and maintain production lines, which makes Intel face more pressure in terms of cost control. On the other hand, with the continuous progress of science and technology, the chip manufacturing process is becoming more and more complex, and the requirements for the technical research and development capabilities of enterprises are getting higher and higher. Intel's investment in technology research and development is also huge, which undoubtedly further exacerbates its cost pressure.
Third, Intel's R&D and production progress in advanced processes is slightly behind that of competitors TSMC and Samsung, especially when entering sub-10nm nodes, which not only affects its competitiveness in the high-end chip market, but also increases unit costs. More advanced processes often require greater R&D investment, which can lead to huge losses if not translated into large-scale market gains in a timely manner. In addition, due to its late start in the foundry business, Intel faces fierce competition in winning external customers, and may have to adopt a low-price strategy in order to attract customers in the early stage, further compressing profit margins.
Fourth, in response to the current predicament, Intel needs to take a series of measures to deal with it. First of all, Intel should re-examine its own production model and consider whether to adopt a foundry approach to reduce production costs. While this may increase external dependence, it may be a strategy worth trying in the current market environment. Second, Intel needed to further optimize internal management to improve productivity and quality. Through the introduction of advanced production management system and technical means, reduce production costs, improve product quality, so as to enhance market competitiveness. In addition, Intel should also increase its R&D efforts to continuously introduce innovative and competitive new products. In the current market environment, only continuous innovation can stand out in the fierce market competition.
Intel's chip foundry loss of $7 billion is not an isolated incident, but the result of multiple factors, not only the impact of the market environment, but also the company's internal strategic decision-making and technical route selection. To turn a profit, Intel must flexibly adapt to market changes, strengthen cost control and business model innovation while maintaining its leading position in technological innovation, so that Intel can return to the world's top table.