Intel Corp (NASDAQ:INTC, ETR:INL) stock slumped more than 4% in US premarket trades after it revealed its chip-making business lost more than $7 billion last year, despite burgeoning demand for AI.
Losses in the foundry business, which manufactures Intel’s proprietary semiconductor chips, increased from $5.2 billion in the prior year.
The company reckons 2024 will be the lowest point for its foundry in terms of profitability as it believes the unit is now positioned to benefit from forecasted growth in its sector.
"Intel Foundry is going to drive considerable earnings growth for Intel over time,” chief executive Patrick Gelsinger said on an investor call. “2024 is the trough for foundry operating losses."
The company sees a path to "achieve break-even operating margins midway between now and the end of 2030."
Unlike competitors that outsource the manufacturing of their IP, Intel has been investing to ‘double down’ on its foundry services which not only make Intel chips but also provide contract manufacturing to other semiconductor designers.
In New York, Intel stock was down $1.83 or 4.16% changing hands at $42.11 ahead of Wednesday’s open.