The quarterly report on Form 10-Q contained information that eloquently illustrates the futility of Intel’s efforts to transform itself into a serious player in the contract manufacturing services market for chips. As it turned out, the company’s revenue from providing such services to third-party clients not only decreased significantly compared to last year, but also barely exceeded 1.5% of the total revenue received from the production of chips.
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Meanwhile, the slide from yesterday’s presentation showed the amount of $4.4 billion associated with the activities of the Intel Foundry, although operating losses of $5.8 billion could also impress the unprepared average person. However, if we consider that operating losses in the last quarter included $3.1 billion in losses associated with the write-off of obsolete equipment for the production of chips, then the dynamics of operating losses in a sequential comparison even improved slightly.
The Form 10-Q on Intel’s website today disclosed the Intel Foundry’s revenue generated from third-party customers, both in the silicon wafer processing and chip testing and packaging industries. The company doesn’t separate the two categories of services in its reporting, but CEO Patrick Gelsinger said yesterday that its third-party chip packaging business broke even in the third quarter.
One way or another, in the third quarter, services to third-party clients brought Intel Foundry only $67 million, and this is at least four times less than the $312 million that was received a year earlier. If we take the nine months of this year, then revenue in this area did not exceed $171 million compared to $661 million a year earlier. In fact, Intel Foundry still receives the bulk of its revenue from servicing its own orders from the parent corporation. Patrick Gelsinger said at yesterday’s reporting conference: “Obviously, as soon as we start acquiring new clients, we will share our progress with you. It will have a more significant impact on our 2026 financials, while we will ramp up our own chip manufacturing and wafer processing in-house, achieving a more favorable profit structure across the Panther Lake family and Intel 18A process technology, as well as other product lines. “
Intel is in no hurry to disclose the names of its clients who are ready to receive chips from it, but often operates on their quantity. At the last quarterly conference, Gelsinger recalled that the month before last a multibillion-dollar agreement was concluded with Amazon (AWS), under which Intel will supply this customer with substrates for advanced chips made using Intel 18A technology. There are also two more potential clients for this technical process, for whom the production of computer-related chips is a priority for business development. Among Intel’s defense customers, Northrop Grumman and Boeing were previously interested in this technological process, and Intel also offered it to the telecommunications giant Ericsson.