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Intel did not offer year-round financial forecasts, as it usually does.
Alexander Koerner / Getty Images
In recent weeks, investors have been rewarded
Intel.
The company recently announced a new CEO and has attracted a powerful activist shareholder.
Now, it seems that executives have disappointed some who had positioned themselves more positively in the company’s outlook. He said Thursday that he would basically double his chip-making strategy at home, instead of having another specialist make the semiconductors.
Shares of Intel (ticker: INTC) fell 8.3% to $ 57.26 in trading on Friday.
Incoming CEO Pat Gelsinger did little to help stocks on Thursday a call with analysts and investors. In his initial statements, Gelsinger said that after reviewing Intel’s progress in perfecting next-generation manufacturing technology, it would remain committed to building most of the company’s chips under its own roof. . But at the same time, he said that to meet their needs, the veteran chip maker would have to look outside and hire more companies to help them.
“Based on the initial reviews, I am pleased with the progress made in the health and recovery of the 7-nanometer program,” Gelsinger said. “I am confident that most of our 2023 products will be manufactured in-house. At the same time, given the breadth of our portfolio, we are likely to expand the use of external foundries for certain technologies and products. ”
Investors wanted a clear decision on how next-generation Intel chips would be produced, but they didn’t get them. There was also a lack of clarity about profit prospects.
Intel did not issue financial forecasts for the full year, as the company usually does in its fourth-quarter calls, only telling investors they expected non-GAAP first-quarter earnings of $ 1.10 per share on sales of $ 17.5 billion. The number excludes the flash memory business, which Intel sold last year.
On the plus side, current CEO Bob Swan, to whom the board of directors shows the door on Feb. 15, explained that Intel engineers had essentially solved the performance problems Intel has had. with its so-called seven-nanometer manufacturing technology.
To increase the processing power of chips and remain competitive in the semiconductor industry, companies must continually invent new ways to reduce transistor chip building blocks and extract more of them in a piece of silicon.
It is now an atomic-level engineering problem, which makes chip making hard, complex and expensive. I
Taiwan semiconductor manufacturing
(TSM), Intel’s rival and frequent trading partner, is a very good chip maker.
Raymond James analyst Chris Caso summed up the problem of Intel’s plan perfectly: “The problem with this strategy is that even if Intel runs successfully at 7 nm, they are still a node behind of TSMC. And we don’t think [Intel] can offer leadership products without leadership in transistors because it had never been done before. This is maintained [Intel] behind the industry for another four years ”.
That Jefferies analyst Mark Lipacis looked like Intel would continue to make its own chips seemed like an announcement that had once again left behind next-generation technology. Executives had already told investors that it planned to ship next-generation processors by the end of 2022. Telling investors that it would manufacture its 2023 chips would again suggest that its products be delayed.
While first-quarter guidelines looked good, Intel’s delay in providing true clarity on its manufacturing strategy until the end of this year makes stocks difficult to recommend, the RBC analyst wrote. Capital Markets, Mitch Steves. He valued the shares the equivalent of a sale and reiterated that call due to the company’s lack of clarity about its future.
Intel shares have retreated nearly 10% in the last year, as the PHLX Semiconductor benchmark rose 60%.
Write to Max A. Cherney to [email protected]