Equities

Intel's Foundry Business Reports $7 Billion Loss, Break-even Target by 2030 Sparks Analyst Optimism

POSITIVE

Intel reveals $7 billion loss in foundry business for 2023, aims for break-even by 2030 amidst strategic overhaul.

By Athena Xu

4/3, 14:47 EDT
Intel Corporation
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Key Takeaway

  • Intel reports a $7 billion operating loss in its foundry business for 2023, with strategic plans to reach break-even by 2030.
  • Despite the loss, analysts remain optimistic, citing Intel's transparency and long-term growth potential in manufacturing.
  • Cantor Fitzgerald maintains a neutral rating with a $50 target; Stifel holds at $45, both acknowledging the challenges and future prospects.

Intel's Foundry Business Unveils

Intel, the semiconductor giant, recently took a bold step by disclosing the financials of its semiconductor manufacturing, or foundry, business for the first time. This move, separating the foundry arm's performance from the broader products business, has provided a clearer picture of the company's operations. Despite a reported operating loss of $7 billion for the foundry business in 2023, Intel's transparency and strategic foresight have been met with a positive reception from the market analysts.

Strategic Optimism Amid Challenges

The company's products business reported a robust $11.3 billion in operating income in 2023, underscoring the strength and potential of Intel's diversified operations. Intel's leadership has expressed confidence, projecting the foundry losses to peak in 2024 and aiming for a break-even point between the current quarter and the end of 2030. This long-term vision reflects Intel's commitment to its foundry business and its strategic plans for future growth.

Analysts Acknowledge Intel's Path

Analysts from Cantor Fitzgerald have maintained a neutral rating and a $50 price target on Intel's stock, commending the company for its new financial reporting structure. Their investor note highlights the importance of the journey ahead for Intel, emphasizing the need for the company to enhance its operating margins in both the foundry and products segments. "NOW is when the real work begins," they noted, acknowledging the challenges while also pointing to the potential for significant advancements, particularly as Intel's manufacturing leadership is expected to ramp up in 2027.

Similarly, analysts from Stifel have reiterated their positive outlook on Intel's strategic plans, maintaining a hold rating and a target price of $45 on the stock. They recognize the multi-year execution cycle that lies ahead for Intel but remain optimistic about the company's direction and potential for growth.