Posted on 11/03/2022 4:58:40 PM PDT by FarCenter
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"Our ambition is to be the No. 2 foundry in the world by the end of the decade, and [we] expect to generate leading foundry margins," Randhir Thakur, the president of Intel Foundry Services, told Nikkei Asia. IFS was set up last year to turn Gelsinger's vision into a reality.
For Intel, such a move is not only a new potential revenue source, but also a way to regain a technological edge in chip manufacturing lost to Asia over the past decades.
Investors, however, do not seem entirely convinced: Intel's share price has more than halved since it embarked on its foundry transformation.
The company's spending in this area includes $20 billion for a chip facility in Oregon and 17 billion euros ($16.8 billion) to build a plant in Germany, as well as $3.5 billion to expand its chip packaging facility in New Mexico, a $20 billion investment in Arizona fabs and a 17 billion euro expansion in Ireland. On top of that, Intel acquired Israeli foundry Tower Semiconductor for $5.4 billion in February.
Meanwhile, slowing global demand for chips has weighed on Intel's top line. The company reported a 20% year-over-year drop in third-quarter revenue last week, and lowered its 2022 full-year revenue outlook to between $63 billion and $64 billion, down as much as $4 billion from its previous guidance.
Coupled with the heavy spending on its foundry business, Intel is now expecting to end 2022 with a negative $2 billion to $4 billion free cash flow, compared to the negative $1 billion to $2 billion it projected earlier this year.
While investors may have doubts, however, analysts and industry insiders say Intel's foundry strategy is "sensible" and massive upfront investments are simply the price the company must pay to make it work.
"For an IDM [integrated device manufacturer] like Intel to really survive, there are only a couple of things that they can do. They can either grow and get scale, or they specialize," said Wayne Lam, senior director of research at CCS Insight, an industry analysis company.
David Crawford, head of the global technology and cloud services practice at consultancy Bain & Co., agreed.
"I think it's a very sensible strategy for Intel to scale into the fabrication business, yet it is not for the faint of heart," Crawford said. "You're either in or you're out. The worst strategy for someone like Intel is to be middling."
Nice that they are creating American jobs...I will reward them when I make buying decisions.
I’d love to see Intel...AMD...and other US chip makers to be major players.
It’s at $27.39 today. I’ll buy 5,000 shares when it drops to $20.
Can’t argue with that.
No mention of Ohio:
Intel is betting on America.
Betting on America, or realizing anything they do In China is basically handing their IP away…
AMD is a fabless design outfit. Their chips are made by TSMC.
The last time Intel tried to setup a foundry, infighting inside the company doomed it.
Hopefully Pat Gelsinger, (the father of the 486) will make this happen.
AMD doesn’t have a foundry.
They use TSMC to build their chips along with Apple and Qualcomm.
They tried to have a joint venture with Global Foundry but GF’s advanced process was simply a tweaked version of Intel’s 14nm.
It was never going to hit their target frequency.
“Our ambition is to be the No. 2 foundry in the world by the end of the decade
—
How long to No. 1?
I think the stocks are going to go back up after Tuesday’s election when the republicans win. Trump will announce he is running for president on Nov 24th.
There will be some set backs if there is a rail strike....
The obstacle is McConnell and McCarthy and other rinos who will undermine anything that helps the country if they can make money for themselves.
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