Intel’s Foundry Business Loses $13 Billion in 2024 – Is There Any Hope Left?

• Why Is Intel's Foundry Business Losing Billions?
• How Did Nvidia's Investment Ignore Intel's Biggest Problem?
• Why Won't Even Nvidia Use Intel's Factories?
• What Are Intel's Options Now?
• Frequently Asked Questions

Intel's foundry division is hemorrhaging cash at an alarming rate, with losses doubling to $13 billion in 2024. Despite Nvidia's recent $5 billion investment in Intel, the foundry business was conspicuously absent from the deal. Analysts warn the bleeding may continue through 2027, with some suggesting Intel should cut its losses and sell the unit. Meanwhile, Nvidia continues to rely on TSMC rather than Intel's factories, dealing another blow to Intel's foundry ambitions.

Why Is Intel's Foundry Business Losing Billions?

Intel Foundry Services (IFS) was launched in 2021 as CEO Pat Gelsinger's bold plan to transform Intel from an integrated chip designer to a contract manufacturer. The idea was simple: leverage Intel's manufacturing expertise to produce chips for other companies while reducing reliance on its own CPU business. But three years later, the strategy has backfired spectacularly.

In 2023, IFS lost $7 billion. By 2024, losses ballooned to $13 billion - nearly doubling in just one year. "This is a business that will continue to bleed cash at least through 2027," warns Angelo Zino from CFRA. The division has failed to attract major customers, leaving Intel's expensive new fabrication plants operating well below capacity.

How Did Nvidia's Investment Ignore Intel's Biggest Problem?

When Nvidia announced its $5 billion investment in Intel last week, sending Intel's stock soaring 30%, you'd think it WOULD have addressed Intel's most pressing issue. Instead, the deal was conspicuously silent about the foundry business. Not one word about using Intel's manufacturing capabilities.

The agreement gives Nvidia a 4% stake and includes technology sharing - Nvidia will use Intel CPUs in its servers while Intel incorporates Nvidia's AI tech into its PC chips. But as Chris Danely from Citi points out, "The rally was overhyped... the foundry division has minimal chance to succeed."

Why Won't Even Nvidia Use Intel's Factories?

At the press conference announcing the deal, both CEOs were asked if Nvidia would use Intel's foundries. Their response? "Maybe someday." For now, Nvidia remains firmly committed to TSMC - Intel's primary competitor and the world's leading chip manufacturer.

This is particularly embarrassing for Intel given the U.S. government's push to diversify semiconductor supply chains away from Taiwan. "I was expecting Nvidia to announce some contract manufacturing deal with Intel, with the U.S. government's involvement," said Anshel Sag from Moor Insights & Strategy. But no such commitment materialized.

What Are Intel's Options Now?

Intel faces a classic "damned if you do, damned if you don't" scenario with its foundry business:

• Sell the unit: Some analysts suggest cutting losses, but this would increase Intel's own chip production costs by losing manufacturing scale.
• Double down: Continue investing billions hoping to eventually attract customers, despite mounting losses.
• Government bailout: The U.S. already owns 10% of Intel and could provide more subsidies, but this isn't a long-term solution.

As one industry insider told me, "Intel's foundry problem is like trying to turn an aircraft carrier - it takes miles of ocean and you can't stop halfway." The company bet big on becoming a foundry, but three years in, there's still no sign the strategy is working.

Frequently Asked Questions

How much has Intel's foundry business lost?

Intel Foundry Services lost $7 billion in 2023 and $13 billion in 2024 - nearly doubling its losses in one year.

Why didn't Nvidia agree to use Intel's foundries?

Nvidia appears unconvinced by Intel's manufacturing capabilities and continues to rely on TSMC, which has more advanced technology and proven production quality.

What happens if Intel shuts down its foundry business?

Closing the foundry would eliminate billions in losses but would likely increase Intel's production costs for its own chips, potentially making them less competitive.

Is there any hope for Intel's foundry turnaround?

Most analysts are pessimistic, with CFRA's Angelo Zino predicting losses will continue through at least 2027. The lack of major customer commitments suggests the situation won't improve soon.