Chip stock Intel (INTC) looked like it might have been in the doldrums just a few hours ago, but then, fresh news emerged in rapid fashion, and shareholders got on board in a big way. News about Intel’s plan to break away from the Taiwan Semiconductor Manufacturing Company (TSM) altogether and alter its laptops sent shares up over 8% in Friday afternoon’s trading.
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A new report from Tom’s Hardware makes it clear that Intel’s huge loss of a massive discount at TSMC will not have much impact on the company because it will largely be out of TSMC’s bailiwick to begin with. The new line of Panther Lake processors will be made with “70% in-house silicon.” This was welcome news enough by itself, but then, consider that the Nova Lake lineup is also set to be made largely internally. That means quite a bit of cost savings on the table for Intel going forward.
However, that does not mean that Intel will be eschewing all external production. The report noted that some of Intel’s processors will continue to be “…leverage(d) externally.” But, as CEO Pat Gelsinger put it, “…the large majority of Nova Lake and more of the additional tiles have come back in-house as well.” Thus, some processors will have a higher margin and others a lower margin, depending on how much external processing is involved.
Memory Sticks are Back
Meanwhile, a new report from The Verge notes that one of the biggest changes Intel made to laptop chips in the last few years is getting walked back. Lunar Lake laptops, longtime Intel buffs will know, ditched memory sticks, instead putting memory into the processor package. That will no longer be the case; Intel now considers that a “financial mistake” and will be separating the memory once more.
This, as it turns out, was also at least partially a consequence of TSMC; the Lunar Lake chips were effectively too reliant on TSMC for the wafers and memory chips required to produce the Lunar Lake line. And with Intel clearly looking to cut as many ties as possible with TSMC, the design of future chips would have to be altered as well.
Is Intel a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 37.27% loss in its share price over the past year, the average INTC price target of $25.45 per share implies 9.32% upside potential.
