Intel’s chip division will suffer $7 billion in operating losses in 2023, Reuters reported on Tuesday. That’s a big increase from the $5.2 billion it lost in 2022, and while it earned $18.9 billion in revenue in 2023, that figure is 31 percent lower than the $27.49 billion it earned the year before .

However, based on CEO Pat Gelsinger’s comments to investors, the overall loss isn’t a total surprise. Gelsinger says these latest figures are partly the result of Intel’s past mistakes in catching up on its foundry business, which led the chipmaker to outsource about 30 percent of all its wafer production to other foundries, such as TSMC, currently one of Intel’s biggest competitors.

But now Intel has invested in using extreme ultraviolet (EUV) machines from Dutch company ASML, while it previously decided not to. Gelsinger expects the cost-effectiveness of these tools to help Intel break even by 2027. ASML also says on its website that its technology makes scaling up mass production of computer chips more affordable for chip foundries such as Intel.

It looks like Intel made the right decision just in time. In total, Intel plans to spend about $100 billion to build or expand its chip foundries in four states. It will also receive up to $8.5 billion in funding from the US government as part of the new CHIPS Act. But for everything to go according to plan, Intel will have to convince companies to use its chip manufacturing service. Microsoft recently signed on as a foundry customer, but it’s unclear how many businesses Intel will need in a few years (as planned) to break even.

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