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Former Intel chief Pat Gelsinger: ‘I’ve been called here for a purpose’

I am just telling you they will not break even in 2027. Fab 52 isnt even fully loaded at the end of 2026. Fab62 is not tooled out in 2026.

Intel does not have plans to run anything in Ohio at this point.

yields may or may not be an issue. wafer cost on 18A and 14A is believed to be an issue
 
Got the CHIPS act grant money for Intel (Although brain dead Biden admin was prioritizing DEI & helping out foreign companies more than helping out their own😲😲😲😲

dkr1986 said:
Come on, this is not true at all.

Things that have changed for Intel Foundry since 2021,
- Successfully caught up to TSMC on node process tech or at least land in the same ballpark as TSMC compared to stuck on 10nm in 2021. 18A>=N3P with 3-4 months lag on actual products in shelf, 18A-P is withing ballpark of N2. 14A will be ~=A14. IMO, the best thing LBT can do for Intel Foundry is to accelerate 14A to be manufacturing ready before A14.
- Intel has now shells built in USA and ready for onboarding customers on advanced nodes in USA to service external customers. Strategically aligned with US government's initiative to onshore\re-shore semiconductor production back to USA.
- Successfully leveraged advanced packaging tech & supported Intel Product's tile based products during those years supporting HVM of many such products.
- Executed cost reductions all the while their top line was under pressure by low wafer volume due to Bob Swan's plan to use TSMC for PC products (Meteor Lake supporting tiles, Arrow Lake & Lunar Lake). [Outsourcing to TSMC was a good stop gap plan that helped Intel Products keep market share (especially Lunar Lake) - so it was a necessary step I don't blame BS for - but it is undeniable that led to pressure on Intel Foundry topline). All those wafer volume would have offset the fixed cost of a foundry business like in 2021 at least on a Gross margin basis.
- Successfully stood up an external foundry framework (node process, capacity etc) & established foundry ecosystem (still WIP). TSMC was not built in couple of years, IFS will not be built in couple of years, imo it will take at least 5+ years to stand up a foundry that is profitable just like any other fixed cost businesses that rely on economies of scale. At least Intel has the product division to satisfy a portion of that wafer volume demand from Intel Foundry before others sign up.
- Got the CHIPS act grant money for Intel (Although brain dead Biden admin was prioritizing DEI & helping out foreign companies more than helping out their own - I think they didn't want to be seen as being discriminatory to Taiwan since virtue signaling seems to be one of their goal- Most Asian countries would throw a foreign business under a Bus to favor their own companies if the roles were reversed).
- Signed up customers like Microsoft, Amazon and DoD on 18A, Mediatek on Intel 16. Colloborations with UMC & Tower (China made a major blow to Intel Foundry by not letting them acquire Tower Semi)

All this while their primary CPU business was being disrupted due to myriad of reasons. All this heavy lifting was done under a brain dead BoD and US admin. Intel Foundry is setup for success especially with Trump admin in power, they just need to execute the strategy forward. With LBT's push for efficient operation, I am confident they will become a reliable 2nd source Foundry by 2030.
Click to expand...
 
dkr1986 said:
IIRC, John Pitzer again reiterated that they expect to break even exiting 2027 at an investor conference recently on operating profit basis, only caveat being they will see expenses raise if they land a 14A customer (meaning they need to re-hire a bunch of people they fired to run the Ohio fabs leading to increase in OpEx again)

View attachment 3925

If you are referring to the 18A yield comments, he said yield is at what they expect it to be for a node on ramp up process. It will be high enough to drive margins end of 2026 and industry standard level margins in 2027. I don't see a smoking gun in that comment without knowing appropriate level of margin he is talking about here. Intel target operating profit for IFS was 30-40% back in 2023, may be he is referring to that for 18A. Even if we take a pessimistic pov, he thinks they can drive "appropriate level of margin" in 2027. Industry standard is probably referring to TSMC's OM of 50% recently.
View attachment 3926
And everyone conveniently forget about this comment about 18A yields in the same ER call. 18A yield is where they want them to be at this point of time.
View attachment 3927

I agree with you on this. That is why I said by 2030. Global Foundry had negative gross margin between 2018 to 2020 and as they have increased topline, economies of scale kicked in and now they are profitable by Gross Profit & Operating Profit basis. There is no reason to think Intel can't achieve that too. With USG onboard and LBT driving operating efficiency, slowly and surely, more customers will signup for IFS and they will become profitable by Gross profit basis first, then operating profit & free cash flow positive (these usually correlates) and then GAAP net income basis.
Click to expand...
The upcoming event:
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UBS Global Technology and AI Conference (Updated)

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