vacancies advertise contact news tip The Vault
facebook rss twitter

Intel's new chip plants won't result in it catching up with AMD

by Mark Tyson on 11 May 2021, 10:11

Tags: AMD (NYSE:AMD), Intel (NASDAQ:INTC)

Quick Link: HEXUS.net/qaeqkl

Add to My Vault: x

During the Intel Unleashed: Engineering the Future webcast in late March there were lots of exciting plans laid out by Intel. The event helped signal the direction that new CEO Pat Gelsinger wanted to chart for the US chip making icon, once often referred to as Chipzilla. It certainly seemed like Chipzilla had got a new set of teeth.

The backbone of the presentation was the news about IDM 2.0, Intel's plans to reinvest in the foundry business. This activity would be complemented by "a world-class foundry business" dubbed Intel Foundry Services (IFS), to sell "leading-edge process technology and packaging" services to third parties. Other important parts of the Intel Unleashed: Engineering the Future webcast were reassurances that Intel 7nm was "progressing well" and the ambitious aim to progress from Tiger Lake, Alder Lake, Meteor Lake then move once more to a tick-tock process-refinement advancement model. Last but not least, Gelsinger pleased techies by announcing the new Intel ON annual innovation event, made largely from the mould/spirit of IDF.

It might be easy to get swept away with the enthusiasm and positive plans outlined by the new CEO Pat Gelsinger. However, a research note shared by Atlantic Equities analyst Ianjit Bhatti on Monday wasn't so upbeat. In brief, Atlantic cut its Intel price target to $45, from $63. This note is reportedly largely responsible for the ~3 per cent Intel share price drop seen yesterday. At approx $56 at the time of writing, Intel shares are still quite a lot higher than the revised price target.

Intel shares have continued to decline in afterhours trading

Central to Bhatti's reasoning for the revised price target is that the IDM 2.0 strategy "does nothing to address continuing market share losses to AMD". Furthermore, the analyst sees AMD as the new preferred [processer] supplier to most cloud customers for new workloads, Intel's ASP is dropping as it loses the high-end, and Intel is still experiencing supply issues which will stretch at least until H2 this year. Intel's grip on systems making partners has at last seemed to loosen in the last few months and a good place to see this shift is the gaming and high-end laptop market. On the positive side of things, it is admitted that IDM 2.0 might actually be the best long term strategy for Intel.

Barron's report on the Atlantic Equities research note, offers some further interesting comments by Northland Securities analyst Gus Richard. Northland reiterated its $42 price target for Intel on Monday. "Intel is not dead, just severely wounded from self-inflicted injuries over the last couple of decades," Richard opined. Fixing Intel is "going to take 3-to-5 years if they are lucky," added Richard, and during this process it will be a painful place to be for investors.



HEXUS Forums :: 11 Comments

Login with Forum Account

Don't have an account? Register today!
Equity firms/investment companies totally known for longterm investments and totally not for asset stripping and short termism. Equity firms totally have not bought up so many UK companies,totally not asset stripped them,and divested the remains which end up with financial issues and the taxpayer picking up the bill.

Also how lucky of them to start shorting Intel on purpose. Say a longterm plan won't work,share drops in price,then sell it when all the jittery people have less jitters. Classic. It happened to AMD all the time.
CAT-THE-FIFTH
Equity firms/investment companies totally known for longterm investments and totally not for asset stripping and short termism. Equity firms totally have not bought up so many UK companies,totally not asset stripped them,and divested the remains which end up with financial issues and the taxpayer picking up the bill.

Also how lucky of them to start shorting Intel on purpose. Say a longterm plan won't work,share drops in price,then sell it when all the jittery people have less jitters. Classic. It happened to AMD all the time.

Exactly - but also a thinly veiled threat saying how Intel were complacent and are now a reactive company rather than proactive
I remember reading at some point in the last decade (if I recall correctly) that an equity/investment company said negative things about a (US) non-tech company, causing their share prices to drop quite a bit.

Coincidentally enough, they apparently bought a lot of shares in that same company very shortly after… :rolleyes:

So it honestly wouldn't surprise me if this was the the first half of a similar attempt.

Although I'm not sure if such a thing would actually be legal if it did happen, but I'd certainly hope not as such a thing would obviously be too blatant to be ignored.

I'm not saying it actually is the case, just that I'm cynical enough about equity/investment companies that it wouldn't surprise me if it was.
Hostile takeover?
Output
Although I'm not sure if such a thing would actually be legal if it did happen, but I'd certainly hope not as such a thing would obviously be too blatant to be ignored.

No, market manipulation is completely illegal in most major markets.