Intel’s Losses, Ford’s EV Delay, and Tesla’s Delivery Decline
Editor’s Note: Happy Friday, amigos!
Losses for Intel’s Foundry Biz
Shares of Intel (NSDQ: INTC) tumbled this week after the company announced its foundry business recorded a deepening operating loss for 2023.
Intel’s foundry business is the unit responsible for making the company’s semiconductor chips.
Unlike chip industry rivals Nvidia (NSDQ: NVDA) and Advanced Micro Devices (NSDQ: AMD), which design chips and send them off to foundries elsewhere, Intel both designs and manufactures its own chips.
However, Intel plans to beef up its foundry business by taking on production for other chip-designing, or “fabless, companies. To that end, the company has secured nearly $20 billion in funding from the U.S. government thanks to the CHIPS and Science Act. The act is intended to boost domestic semiconductor manufacturing.
Anyway, on Tuesday, Intel reported a $7 billion loss on $18.9 billion in foundry business sales — versus a $5.2 billion operating loss on $27.5 billion in sales in 2022. Intel’s foundry business accounted for roughly 35% of the company’s total net revenue last year.
According to the company, it’s expecting losses in the foundry business to peak this year. However, Intel has forecast this segment to break even sometime by the end of 2030.
The company already has $15 billion worth of foundry revenue already booked thanks to an agreement with Microsoft (NSDQ: MSFT).
“Intel Foundry is going to drive considerable earnings growth for Intel over time,” CEO Patrick Gelsinger said on a call with investors. “2024 is the trough for foundry operating losses.”
In a promotional video released Tuesday, Intel blamed its foundry business’s operating losses on the “weight of past decisions.” But on his call, Gelsinger also said that the company had been too slow to adopt the EUV (extreme ultraviolet) technology used for advanced chips.
Ford Delays EV Production
Ford Motor (NYSE: F) announced yesterday that it will delay the production of a couple of all-electric models in favor of adding more hybrid options in North America.
Specifically, Ford is postponing the production of an all-electric three-row SUV from 2025 to 2027. The company is also pushing back the production of a next-generation pickup, known as “T3,” from 2025 to 2026.
Ford is the second-largest EV brand in the U.S., behind Tesla (NSDQ: TSLA). But here in North America, consumers have been slower than expected to adopt EVs. Of course, it doesn’t help that charging infrastructure is still relatively elusive and that all-electric cars are expensive.
“As the No. 2 EV brand in the U.S. for the past two years, we are committed to scaling a profitable EV business, using capital wisely, and bringing to market the right gas, hybrid, and fully electric vehicles at the right time,” CEO Jim Farley said in a statement.
Ford’s (perhaps) upcoming three-row electric SUV is to be made in the company’s Ontario, Canada, factory. The company has planned to spend about $1.3 billion turning the facility, which currently makes gas-powered vehicles, into an EV hub.
“The additional time will allow for the consumer market for three-row EVs to further develop and enable Ford to take advantage of emerging battery technology, with the goal to provide customers increased durability and better value,” a Ford company statement said.
Last year, Ford’s EV unit, Model E, lost $4.7 billion. In 2024, the automaker expects the unit to lose between $5 billion and $5.5 billion.
Still, for the first quarter, Ford reported an 86% boost in EV sales compared to a year ago. On a year-over-year basis, hybrid sales were up 42%. Sales of traditional gas-powered vehicles rose by only 2.6%.
Tesla’s First Post-COVID Delivery Decline
Speaking of Tesla… the company reported its first year-over-year drop in EV deliveries since the second quarter of 2020 — when COVID lockdowns disrupted production.
In the first quarter of 2024, Tesla delivered 386,810 vehicles worldwide. Expectations had been for roughly 450,000 deliveries.
That was also a drop from the 484,507 EVs Tesla delivered in the fourth quarter of 2023.
“While we were anticipating a bad [first quarter], this was an unmitigated disaster that is hard to explain away,” Wedbush’s Dan Ives wrote in a note this week.
According to Tesla, production and delivery slowed in the first quarter due to a litany of issues, from the arson attack at its Berlin, Germany, facility to the increased focus on Model 3 vehicles at the company’s Fremont, California, factory.
Take a look:
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