June 21 (Reuters) – Intel Corp (INTC.O) said on Wednesday its manufacturing business will work like a separate unit and will begin to generate a margin, but gave no clear timeline on when it will start scaling up, sending the chipmaker’s shares down about 5%.
The company also did not name a new external customer for the business as part of its foundry services, a key element of Intel’s turnaround plans wherein it will offer its manufacturing services to other companies including its competitors.
Intel’s internal business units will now have a customer-supplier relationship with the manufacturing business, Chief Financial Officer David Zinsner said on an investor call.
Based on that model, Intel will be the second largest foundry next year with manufacturing revenue of more than $20 billion, he said.
However, the forecast for the business pales in comparison to Taiwan Semiconductor Manufacturing Co’s (2330.TW) sales, which are expected to be close to $85 billion in 2024, said Summit Insights Group analyst Kinngai Chan.
“The presentation essentially tells investors that its current manufacturing is sub-scale and could remain sub-scale for a while,” Chan added.
Reporting by Chavi Mehta in Bengaluru; Editing by Maju Samuel
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