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Comment by ClassyJacket | Hacker News Reader

Sorry if this is a dumb question, but why are operating losses expected? Aren't chips in high demand compared to supply? Couldn't they charge high?

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All Intel did was just report a new operating structure and re-allocate revenue and costs to that segment. So essentially expenses that went into manufacturing before are now just thrown under IFS. It's just a bunch of financial engineering.

New Intel financials: https://www.intc.com/filings-reports/all-sec-filings/content...

Old Intel financials: https://d1io3yog0oux5.cloudfront.net/_9bece0e2e2052ad835960e...

It's not just financial engineering. It's a key step towards their goal of splitting the foundry and design businesses apart. They already manufacture chips they design on other people's foundries, and manufacture chips other people designed on their foundries. That's step one. Step two is to make both sides independently profitable.

At some point Intel might conceivably split into two fully separate companies.

Not a dumb question, but because they are so expensive to build, fabs have a high upfront cost before they can start to turn a profit. Oddly, the older a fab is, typically the more money it will make you.

It's also a big part of the reason as to why so many fab companies have died out. Building a new fab with the latest tech is extremely expensive. If you have a couple of big swings and misses, you can easily burn a tremendous amount of your capital.

IFS isn't producing any silicon for Nvidia. That's in high demand.

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