Intel Signals Potential Exit from Future Chip Manufacturing, Creating Market Turmoil
ntel's (NASDAQ:INTC) latest earnings report has sent shockwaves through the semiconductor industry after the company warned it may stop developing its own manufacturing technology beyond its upcoming 18A process. This announcement raises the significant possibility that Intel, a pioneer of in-house chip manufacturing, could one day become a "fabless" company, designing its chips but outsourcing production.
The move is seen as a major strategic pivot. While Intel remains committed to its 18A node, the potential cancellation of the next-generation 14A node would have massive ripple effects across the global supply chain.
Key Takeaways from the Bernstein Analysis:
A “Cry for Help”: Analysts at Bernstein interpret the announcement as a “cry for help to the administration coupled with a veiled threat,” potentially aimed at securing government support or customer commitments.
Company Actions: Following the news, Intel’s shares dropped 8%. The company, led by CEO Pat Gelsinger, also announced plans for more job cuts, halting construction on two new facilities in Europe, and slowing work on a third in Ohio. This marks a stark reversal of the previous strategy to invest heavily in new factories to regain manufacturing leadership.
Winners:
TSMC (TSM): The Taiwanese foundry giant stands to be the biggest beneficiary if Intel goes fabless.
Samsung (005930.KS): Also well-positioned to gain business as a leading-edge alternative.
Hoya: As a key supplier to TSMC, the company could see its market share grow significantly.
Losers:
ASML (ASML) and Lasertec (6920.T): These equipment suppliers are highly exposed to Intel’s capital spending. Bernstein estimates Intel accounts for ~9% of ASML’s revenue and a more significant 28% of Lasertec’s.
Overall Conclusion: Bernstein analysts concluded that Intel’s decision, “while potentially necessary for Intel’s longer survival… creates substantial disruption and uncertainty around both the business and the stock which it seems prudent to avoid.”
Should You Invest $2,000 in Intel (INTC) Right Now?
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