Intel Announces Massive Investments In Improving Its Products

Intel (INTC) has announced massive plans for investments in improving its products.

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The technology company will spend $3.5 billion to enhance the manufacturing of advanced semiconductor packaging technologies in its New Mexico plant. The investment will also target the enhancement of the company’s breakthrough 3D packaging technology.

Construction at the Rio Rancho Campus in New Mexico, as part of the investment, is set to start later in the year. The investment should result in the creation of 700 high-tech jobs and 1,000 construction jobs. It will also support an additional 3,500 jobs in the local community.

Intel is moving to enhance its manufacturing capacity in New Mexico as it seeks to remain competitive in the semiconductor industry. The investment is part of the company’s IDM 2.0 strategy that calls for product optimization.

“A key differentiator for our IDM 2.0 strategy is our unquestioned leadership in advanced packaging, which allows us to mix and match compute tiles to deliver the best products. We’re seeing tremendous interest in these capabilities from the industry, especially following the introduction of our new Intel Foundry Services,” said Keyvan Esfarjani, Intel’s SVP and GM of Manufacturing and Operations.

In addition to the New Mexico investment, Intel is also investing $600 million as it seeks to ramp up its research and development (R&D) operations in Israel. Reuters reports that the company is inclined to turn its Mobileye unit into an R&D campus. As part of the transformation, the chip giant will spend $400 million enhancing the facility so it can start developing self-driving car technologies.

The remaining $200 million will go towards constructing a new R&D center in the northern port city of Haifa. Reuters also reports that the chip giant is poised to spend $10 billion on a new chip plant in Israel. (See Intel stock analysis on TipRanks)

Additionally, Intel has planned multibillion-dollar expansions at its sites in Arizona, Oregon and Ireland.

Northland Securities analyst Gus Richard reiterated a Sell rating on Intel, although it reported a strong quarter, supported by record notebook shipments that were up 54%.

“INTC is losing high-end share to AMD and x86 is losing share to ARM. We do not think entering the foundry business or government money will solve INTC problems any time soon,” Richard wrote.

The analyst has a $42 price target on the stock, implying 27% downside potential to current levels.

The consensus among analysts is a Hold based on 12 Buy, 10 Hold, and 8 Sell ratings. The average analyst price target of $67.19 implies a 16.79% upside potential to current levels.

INTC scores 9 out of 10 on TipRanks’ Smart Score rating system, implying it is likely to outperform the overall market.