Shares of Intel fell by 5% in early trading

Intel shares fell by 5% before the start of trading on April 3 due to losses from the production of custom chips, indicating that it may take years for the company to catch up with the profitability of Taiwan Semiconductor Manufacturing Company (TSMC). This was reported by Reuters.

On April 2, Intel released new financial information on its custom chip manufacturing unit. The company reported an operating loss of $7 billion in 2023, up from $5.2 billion in 2022.

"We expected the economics of custom chip manufacturing to be bad, and they are really bad. We probably have a few more years of serious headwinds ahead of us," said Bernstein analyst Stacy Rasgon.

If the stock's drop continues by the close of trading, Intel will lose more than $9 billion in market value.

The company has spent billions of dollars to regain the title of the leading manufacturer of the most advanced chips, but it has lost this position to Taiwan Semiconductor Manufacturing Company (TSMC), which is now the world's largest manufacturer of custom chips.

As of December 30, 2023, the US chipmaker's capital investments, classified as "construction in progress," amounted to $43.4 billion, up from $36.7 billion a year earlier.

Intel also plans to spend $100 billion on fabs in four US states, partly through funding under the US Chipmaking Act.

CEO Pat Gelsinger said that operating losses from custom chip production will peak in 2024 before breaking even by about 2027. This division accounted for about 35% of Intel's total net income in 2023.