An established chip manufacturer in the United States$Intel (INTC.US)$Announced another major change in the leadership of the company's foundry business, from a US data center chip leader$Marvell Technology (MRVL.US)$Kevin O'Buckley (Kevin O'Buckley), senior management, has been appointed as the head of the foundry department. As Intel continues to invest more in the chip foundry sector after receiving high subsidies from the US government, the most advanced chip process technology routes of Intel 18A, 14A, and 10A are expected to enter the manufacturing side as soon as possible. The OEM business may then lead the established US chip giant Intel back to its former glory.

According to information, former Maywell executive O'Buckley was appointed as senior vice president and general manager of probably Intel's core department in the future, the foundry business division. The department is responsible for OEM manufacturing chips for external customers. Intel said in a statement Monday that he will replace long-time Intel executive Stu Pan, who is about to retire, and will report directly to Intel CEO Pat Gelsinger as part of the executive leadership team.

Obackley used to be a senior employee of the American tech giant IBM for decades and has been working at Mwell for the past five years. He is about to enter one of the most stressful jobs in the chip industry — chip manufacturing. As part of Intel's ambitious transformation plan led by Gail Singer, Intel is entering the chip foundry business led by TSM.US (TSM.US), the “king of chip foundry.” The division now urgently needs to attract big customers for chip foundry projects, especially as Intel is trying to justify building new large-scale chip factories in the US and Europe.

After a year as head of Intel's foundry department, Penn is leaving Intel. Intel said he successfully launched a new business structure for Intel's chip foundry division, but this effort is still in its early stages.

In addition to seeking major customers to enter the chip foundry industry, Intel is also competing to upgrade its chip manufacturing technology. After decades of domination, the company's chip manufacturing capabilities have completely lagged behind other competitors such as TSMC and Samsung. Gal Singer's core plan is to improve Intel's chip manufacturing and advanced packaging technology, while also striving to produce chips for former competitors such as Nvidia and AMD.

Intel's stock price has experienced major shortfalls one after another, and has plummeted by nearly 40% during the year

However, when Intel recently released more financial information about the business—including shrinking sales and a sharp increase in losses, investors chose to sell off Intel, causing its stock price to plummet.

According to financial data, in 2023, the sales volume of Intel's chip foundry business was about 18.9 billion US dollars, lower than the previous year's 27.5 billion US dollars. At the same time, Intel also expects the overall operating loss of the company's chip foundry to peak in 2024. The operating loss of Intel's foundry business in the first quarter was about 2.5 billion US dollars, which is larger than the loss in the previous quarter and the same period last year.

Furthermore, the company's financial report showed that overall results guidance for the second quarter fell short of expectations. The company expects Q2 sales of around $13 billion, and analysts' average expectations are $13.6 billion. After deducting some items, non-GAAP earnings per share are expected to be $0.01 compared to $0.24.

In addition to the downturn in the OEM business and overall performance expectations, the US government's ban on sales of Intel in the Chinese market has also caused investors to further sell off Intel, mainly because investors are concerned that the decline in sales in the Chinese market may further damage Intel's performance.

According to information, Intel disclosed in the 8-K filing submitted to the US Securities and Exchange Commission (SEC) that the US Department of Commerce has notified the company that it will immediately revoke some of its licenses to export specific consumer goods-related products to Chinese customers. The decision forced Intel to adjust its financial expectations for the second quarter. The US Biden administration previously announced further tightening of export restrictions on Huawei and revoked licenses for US chip companies, including Qualcomm and Intel, to sell semiconductor products to Huawei.

According to the new announcement, Intel expects second-quarter revenue to fall short of the previously estimated median forecast of $12.5 billion to $13.5 billion. The company also expects gross margin of 40.2% and a loss of $0.05 per share in accordance with GAAP guidelines. Despite current challenges, Intel said that compared to 2023, the company's revenue and earnings per share are expected to grow throughout the year.

From a positive perspective, Intel's “darkest hour” may have survived

After news about Intel receiving huge US government subsidies was announced, the well-known investment agency Global Equities Research raised Intel's target share price sharply from $65 to $100 per share over the next 12 months, and stated that even this seemingly “sky-high” target may be conservative.

As of the close of US stocks on Monday, Intel's stock price currently closed at only 30.510 US dollars. The decline since this year is close to 40%. Its stock price can be called the “tail of the crane” in the booming semiconductor sector. In comparison, its competitor Nvidia soared 80% during the year.

According to reports, the US Department of Commerce provided Intel with direct subsidies of up to 8.5 billion US dollars in accordance with the “Chip Act” to help it pay to fully expand chip manufacturing capacity in Arizona, New Mexico, Ohio, and Oregon in the US.

Global Equities said in a recent research report that the US government's high subsidies will fully help Intel achieve its ambition to become a leader in high-end chip foundry, thereby helping Intel become a global leader in “next-generation AI chip” manufacturing in the future. Global Equities said that mainly because Intel has the most advanced chip process technology routes of 18A, 14A, and 10A, it is essential for chip giants such as Nvidia and AMD to mass production plans for higher performance AI chips in the future. Chip manufacturing categories such as “18A” refer not only to the 1.8nm level chip planned by Intel, but also to the 3D chiplet advanced packaging process roadmap planned by Intel.

Global Equities said that with financial support from the US government, Intel has the ability to more quickly develop world-leading 3D advanced packaging processes and mass-produce chips based on 18A, 14A, and 10A advanced processes, and these technologies are the core technologies for manufacturing higher-performance AI chips. Therefore, the agency predicts that with the support of the US government, Intel is likely to stand out, and even that Intel may turn a loss into a profit this year and then surpass its rivals in the next few years.

Intel anticipates that the overall operating loss of the company's chip foundries is expected to peak in 2024, and plans to achieve a gross margin of up to 40% under non-GAAP standards and an operating profit margin of up to 30% under non-GAAP standards between now and sometime in 2030. It is expected to achieve a break-even balance for the entire foundry business in 2030. By 2030, Intel expects its chip foundry to become the second-largest foundry in the world, and its scale may be only slightly lower than that of TSMC, the king of chip foundry.

Intel CEO Gail Singer said not long ago that the company's business transformation is progressing smoothly and will achieve a more advanced 18A process node “one step ahead” than competitors in the chip manufacturing field, while the 18A advanced manufacturing process will bring Intel back on par with competitors in terms of cost.

According to information, Intel's chip foundry business includes chip foundry technology development, chip foundry manufacturing and advanced packaging and supply chain services, and foundry services. Currently, the chip foundry business is an independent operating division under Intel and has its own profit and loss statement.