Important points
- Intel shares fell in after-hours trading Tuesday night after the company disclosed wider losses and lower sales at its foundry business.
- The company's foundry business reported an operating loss of $7 billion on sales of $18.9 billion last year, and a loss of $5.2 billion on sales of $27.5 billion in 2022.
- Intel CEO Patrick Gelsinger said he expects losses in the foundry business to peak this year and reach breakeven midway between now and the end of 2030.
- Investors should keep an eye on the $39.80 level, where Intel stock widens its wedge formation by converging with the lower trendline and support from the 200-day moving average.
Shares of legacy chipmaker Intel (INTC) fell 4% in after-hours trading on Tuesday after the company disclosed widening losses and declining sales in its semiconductor manufacturing business, also known to investors as its foundry business. It fell more than that.
The company's foundry division had an operating loss of $7 billion last year on sales of $18.9 billion, according to company filings. In comparison, in 2022 he posted a loss of $5.2 billion on sales of $27.5 billion.
Improving transparency in Intel's foundry business is part of CEO Patrick Gelsinger's plan to make the division more independent and begin making chips for outside companies. In February, the company announced it had added Windows maker Microsoft (MSFT) as a potential customer, and said it was close to closing deals with other customers it didn't want to name.
The company, one of the few U.S.-based chipmakers, received $8.5 billion in grants and $11 billion in loans last month as part of the Biden administration's CHIPS and Science Act funding to boost domestic semiconductor manufacturing. access was secured. Still, investors are cautious because expanding semiconductor manufacturing facilities requires large amounts of capital. The company said on its fourth quarter earnings call that its manufacturing finances are under significant pressure as it works to build out process leadership and infrastructure.
The chipmaker, which named Lorenzo Flores as Intel Foundry's chief financial officer, expects losses in its foundry business to peak this year and reach breakeven midway between now and the end of 2030. ing. “Intel Foundry will drive significant revenue growth” for Intel over time. 2024 will be the trough for operating losses for foundries,” Gelsinger said on Tuesday. CNBC report.
Intel's stock price has been fluctuating in a growing wedge since last March, establishing distinct areas of support and resistance in the process. If the stock continues to fall following Tuesday's news, investors should keep a close eye on the $39.80 area. In this area, price is at the confluence of the wedge pattern's lower trendline and support from the rising 200-day moving average. A break below this important chart level could lead to a decline in the support near $33.20.
Intel shares fell 4.2% to $42.11 in after-hours trading Tuesday.
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