Chip stock Intel’s (INTC) position as a chip foundry has been somewhat shaky for the last few months. Would it be spun off? Would it be a vital new part of operations? Would it be sold outright? What in the world would happen to it? A new report from Forbes suggests that whatever happens, it may be more important than anyone yet realizes. That was enough for investors, who sent shares surging over 3.5% in Monday afternoon’s trading.
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Intel’s foundry operations are making money, the report noted. It brought in $18.9 billion in revenue by itself in its latest earnings report. However, that $18.9 billion in revenue ultimately produced an operating loss of $7 billion. Sounds like bad news, certainly, but there are signs of improvement. The 18A process, which is an advanced chip-making technology, is coming out, though reports seem to vary on whether or not this will save the company or sink it.
For instance, word from Taiwan Semiconductor (TSM) points out that its N2 process will win in SRAM density, but the Forbes report notes that 18A means better “backside power delivery” for Intel. But the Forbes report also noted a key point: while the CHIPS Act might not be as much help to Intel as you might think, Intel will likely find a friend in the next administration. The Trump administration—both in 2016 and now—was always on the side of American manufacturing, and it is a safe bet it will not go off-brand now.
Feudin’ with Qualcomm
Meanwhile, former potential Intel buyer Qualcomm (QCOM) is finding itself embroiled in a feud with Intel. Intel—via co-CEO Michelle Johnston Holthaus—declared that Qualcomm’s Snapdragon processors power Arm PCs that have unusually high return rates. Qualcomm did not take this lightly, and offered up a statement refuting Holthaus found in Windows Central.
Qualcomm, in the statement, declared that its “…device return rates are within industry norms” and cited a laundry list of awards that said devices have won. Yet, oddly silent on this matter are retailers. There has been no official word about Snapdragon return rates, and there is not likely to be one either, particularly considering how Qualcomm and Intel are among retailers’ biggest clients.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 22 Holds, and six Sells assigned in the past three months, as indicated by the graphic below. After a 53.58% loss in its share price over the past year, the average INTC price target of $24.43 per share implies 15.89% upside potential.
