April 2 (Reuters) -

Intel ( INTC ) on Tuesday disclosed deepening operating

losses for its foundry business, a blow to the chipmaker as it

tries to regain a technology lead it lost in recent years to

Taiwan Semiconductor Manufacturing ( TSM ).

Intel ( INTC ) said the manufacturing unit had $7 billion in

operating losses for 2023, a steeper loss than the $5.2 billion

in operating losses the year before. The unit had revenue of

$18.9 billion for 2023, down 31% from $63.05 billion the year

before.

Intel ( INTC ) shares were down 4.3% after the documents were filed

with the U.S. Securities and Exchange Commission (SEC).

During a presentation for investors, Chief Executive Pat

Gelsinger said that 2024 would be the year of worst operating

losses for the company's chipmaking business and that it expects

to break even on an operating basis by about 2027.

Gelsinger said the foundry business was weighed down by bad

decisions, including one years ago against using extreme

ultraviolet (EUV) machines from Dutch firm ASML. While

those machines can cost more than $150 million, they are more

cost-effective than earlier chip making tools.

Partially as a result of the missteps, Intel ( INTC ) has outsourced

about 30% of the total number of wafers to external contract

manufacturers such as TSMC, Gelsinger said. It aims to bring

that number down to roughly 20%.

Intel ( INTC ) has now switched over to using EUV tools, which will

cover more and more production needs as older machines are

phased out.

"In the post EUV era, we see that we're very competitive now

on price, performance (and) back to leadership," Gelsinger said.

"And in the pre-EUV era we carried a lot of costs and (were)

uncompetitive."

Intel ( INTC ) plans to spend $100 billion on building or expanding

chip factories in four U.S. states. Its business turnaround plan

depends on persuading outside companies to use its manufacturing

services.

As part of that plan, Intel ( INTC ) told investors it would start

reporting the results of its manufacturing operations as a

standalone unit. The company has been investing heavily to catch

up to its primary chipmaking rivals, TSMC and Samsung

Electronics Co Ltd.