It might be one of the darker signs you can get when a major rival like Taiwan Semiconductor (TSM) declares that your company has no strategy and no CEO. That is just what happened to chipmaker Intel (INTC), but this proved a punch investors could roll with. Intel was down only fractionally in Wednesday afternoon’s trading.
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Multiple reports noted that was what Morris Chang, founder of Taiwan Semiconductor, had to say following former CEO Pat Gelsinger’s departure. But more than that, Chang told Reuters recently that Intel needed to focus on artificial intelligence development instead of working on “contract chipmaking.” And, as a Benzinga report noted, S&P Global (SPGI) cut Intel’s credit rating from BBB+ to BBB due to the uncertainty caused by the CEO’s departure and “weak business recovery.”
Further, a growing body of analysts—including Benchmark’s Cody Acree and Truist’s William Stein, who are both rated five stars by TipRanks—have come out in favor of a sale of all or part of Intel. However, both analysts noted that there is a $7.8 billion subsidy at risk should Intel continue on its current path of separating the Foundry and Products operations.
And Then There’s Qualcomm
While Qualcomm (QCOM) might have had an interest in being the buyer of such a transaction, new signs suggest that it is now gearing up for a fight. Word from CRN is that Qualcomm is ramping up its hiring in a bid to build a “…global retail and commercial channel presence” to get its Snapdragon X processors into more hands and, by extension, more computers.
Qualcomm is said to be looking for a North American PC channel distribution manager as well as several channel sales manager positions. This is in support of a recently launched partner program, which is all designed to put more Snapdragon processors in play. Though Qualcomm may still have an interest in acquiring Intel, or part of it, a move like this might put pressure on Intel to lower its asking price.
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 53.62% loss in its share price over the past year, the average INTC price target of $24.43 per share implies 21.42% upside potential.
