It is another day and another setback for chip stock Intel (INTC) as shares slide once again after more bad news emerges. Apparently, Intel’s dream of becoming a chip foundry is not working out so well, as recently-tested chips at Broadcom (AVGO) did not go according to plan. That sent Intel shares down over 3% in Wednesday afternoon’s trading. According to a Reuters report, Intel’s silicon wafers—the disks upon which chips are printed—ultimately failed Broadcom’s inspection.
Worse, the wafers in question were put together using Intel’s best manufacturing process, referred to as the 18A process. That leaves Intel very much on the back foot and its immediate future in doubt.
All hope is not lost, however; reports note that Broadcom is currently “…evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation.” If there are some salvageable portions of Intel’s foundry operations, then the picture may brighten, at least somewhat. Still, given the entire situation, Intel needs much more than a merely brighter picture going forward.
The Fallout Is Staggering
And it gets worse from there, as Intel’s latest troubles are prompting fallout from across the spectrum. First, there are new concerns about the Ohio plant, which Intel has been working on for some time now. Yet, with several government incentives connected to the Ohio plant, it may simply not be able to suddenly stop, as is the concern with the Germany plant that was recently paused.
The government issues continue on from there. Intel has been the beneficiary of quite a bit of government largesse over the last few months—a $20 billion package was unveiled just months ago connected with chip makers like Intel—though some now question if Intel will actually see any of that money, or if so, when. Intel’s troubles are currently weighing on the Biden Administration and, by extension, any hope of a Harris Administration next year.
Is Intel a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. After a 45.72% loss in its share price over the past year, the average INTC price target of $26.09 per share implies 34.48% upside potential.
