New leader preserves original objectives, outlining strategies.
In the world of tech, Intel is facing a critical juncture in its foundry business. The company, under the leadership of its new CEO, Lip-Bu Tan, is committed to making Intel Foundry a success. However, its future investments in advanced process nodes like Intel 14A and successors hinge on securing significant external customer commitments.
Intel's first-quarter results exceeded market expectations, but its stock remains stuck at a resistance zone between $22 and $23. The company is prioritizing the ramp-up of the 18A process technology for the next three processor generations, with first shipments expected by the end of 2025.
For the 14A node, targeted for ramp in 2028-2029, Intel is engaging early with external customers to refine the technology. However, as of now, no binding external customer commitments for 14A have been secured, though two potential customers are in talks.
In an effort to align investments more closely with confirmed demand, Intel is withdrawing from some manufacturing projects and slowing capacity growth. This includes putting on hold chip factory projects in Germany and Poland and delaying a $28 billion factory in Ohio. The company acknowledges that prior capacity investments have outpaced demand and led to a fragmented manufacturing footprint.
Tan emphasizes a disciplined capital approach, building capacity only as external demand materializes to ensure investments yield acceptable returns. This cautious strategy contrasts with that of TSMC, the world leader in contract semiconductor manufacturing, which is known for its aggressive capacity expansion and technology leadership in advanced nodes.
There has been no recent announcement of new major foundry partnerships by Intel. Instead, the company appears to be focusing on attracting external customers to justify advanced node investment rather than aggressive capacity expansion or broad partnership announcements at this stage.
The competitive pressure from TSMC, along with the desire to bring more semiconductor manufacturing back to the West, has led the USA, under both the Trump and Biden administrations, and the European Union to offer billions in subsidies. Intel has benefited from these subsidies, but the future of these projects remains uncertain due to the need for significant external customer commitments.
Innovations in chip design are seen as a potential advantage for Intel in competition with established rivals like TSMC. The company recently secured a new chipmaker customer, MediaTek, which will utilize Intel's contract manufacturing for a new production process.
Despite these developments, there has been no significant momentum in Intel's stock recently. Investors remain invested, but a stop-loss is recommended at €15.00 by AKTIONAER. Both the 50-day and 200-day moving averages for Intel's stock are located at the resistance zone between $22 and $23.
As Intel navigates this critical period, it will be interesting to see how the company balances its commitment to the foundry business with the need for external customer commitments and disciplined capital investments. The competition with TSMC and the push for semiconductor manufacturing in the West will undoubtedly continue to shape Intel's strategy in the coming years.
- Intel's success in its foundry business, particularly in advancing process nodes like Intel 14A and its successors, relies heavily on securing significant external customer commitments.
- As Intel proceeds through this critical juncture, the company's strategy involves focusing on attracting external customers and refining technologies, rather than aggressively expanding capacity or forming extensive foundry partnerships.
