Bernstein analysts said Friday that their main takeaway from Intel’s (INTC) foundry segmentation event was: “There’s no real reason to stay here until 2030.”
Shares of the chipmaker fell about 8% after the company disclosed financial performance for its semiconductor manufacturing unit in its semiconductor manufacturing business, also called its foundry segment.
Specifically, the foundry reported an operating loss of $7 billion on revenue of $18.9 billion in 2023. This loss exceeds the $5.2 billion loss recorded in 2022, with sales previously totaling $27.5 billion dollars.
“In the end, the fact that foundry economics were terrible is not (or should not have been) a big surprise; in fact, the company explicitly proposed this back in June,” the analysts said.
“Having said that, the idea that the situation will get worse in 2024 may have been received somewhat poorly; If anything, the idea that a -37% operating margin and a $7 billion loss does not yet represent the bottom is somewhat breathtaking, especially given all the cost cuts the company supposedly made last year.”
Bernstein acknowledges the potential for improvement in Intel’s (NASDAQ:) foundry business, noting its significant losses last year and an optimistic outlook for operating margins of 25-30% by 2030.
However, analysts expressed caution, suggesting it could be a long road ahead for INTC “even if it is fully aligned with the (seemingly aggressive) goals.”
They stressed that achieving break-even may not be possible until after 2027, and ambitious targets for 2030 remain speculative and dependent on optimal progress, “which remains broad
open debate.”