Intel's Contract Chip Manufacturing to Generate Revenue by 2027
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Intel Anticipates Significant Revenue by 2027
Intel (NASDAQ: INTC) is setting its sights on a bright future for its contract chip manufacturing business, with expectations to start generating meaningful revenue by 2027. This insight comes from the company's Chief Financial Officer (CFO), David Zinsner, who shared details during a recent investor conference.
Strategic Partnerships and Market Focus
Currently, Intel is engaged in discussions with 12 potential customers. These partnerships are expected to bring in some revenue as early as 2026, with a more substantial financial impact anticipated in the following year. The company has shifted its focus away from promoting its 20A manufacturing process, opting instead to concentrate on the more sophisticated 18A technology, aiming for competitive advantage in the marketplace.
Revenue Channels and Cutting Costs
As of now, Intel's foundry business is generating revenue primarily through its advanced packaging services. However, Zinsner did not provide comments on recent reports concerning challenges with test wafers for Broadcom (NASDAQ: AVGO), another potential manufacturing client that has sparked speculation regarding Intel’s operational efficiency.
Intel's Turnaround Strategy
Amid a comprehensive turnaround strategy, Intel is undertaking significant restructuring efforts. This includes the planned reduction of its workforce by 15% and the potential divestment from certain business segments. Intel's CEO, Pat Gelsinger, along with other senior executives, are expected to present detailed plans for the company's future direction to the board during an upcoming meeting.
The Impact of the U.S. CHIPS Act
In terms of financial outlook, Intel's CFO indicated that the company likely will not begin seeing monetary benefits from the U.S. CHIPS Act until later in the year. This legislative action provides substantial funding and incentives aimed at boosting domestic chip production.
Frequently Asked Questions
1. When is Intel expected to generate meaningful revenue?
Intel anticipates generating a significant amount of revenue from its contract chip manufacturing by 2027.
2. What new partnerships is Intel pursuing?
Intel is currently in talks with 12 potential customers to strengthen its contract manufacturing business.
3. What manufacturing process is Intel focusing on?
Intel is prioritizing its advanced 18A manufacturing process over its previous 20A process.
4. How is Intel addressing its workforce reduction?
Intel plans to implement a 15% workforce reduction as part of its turnaround strategy.
5. What role does the CHIPS Act play for Intel?
The CHIPS Act aims to promote domestic chip production, though Intel is not expected to see immediate funding results.
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