TechApr 29, 2024
Intel’s Multi-Billion Dollar US Foundry Expansion Is Killing Its Stock, But It Could Also Save Its Future
Semiconductor Pivot
Noah Weidner
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What stings more than seeing one rival’s stock rise 200% in a year? Watching another’s climb 700%. That’s the situation Intel has found itself in. Once a proud pillar of American tech, Intel has slipped behind competitors Nvidia and Super Micro, leaving its stock trailing. But Intel has a turnaround plan: it’s diving into making chips for its competitors — a costly but necessary move to remain relevant in the fast-paced semiconductor industry.
Not so chippy: In its first quarter report, Intel’s revenue jumped 9% — but it also posted a $400M loss. For the first time, Intel made money from its chip-making arm, Intel Foundry, bringing in $4.4B in revenue (about a third of its total). But those billions came with a landslide $2.5B operating loss in the unit — turning an otherwise positive quarter into a dumpster fire.
With losses fast-outstripping its revenue growth, Intel’s stock has plunged over 34% year-to-date, making it the second-worst-performing S&P 500 stock. But there’s no turning back now — and investors might have to wait a while for Intel’s multi-billion dollar expansion bet to start paying dividends.
But until then… Intel will lean on TSMC, one of its biggest rivals, to manufacture its new Gaudi 3 AI chip — touted 50% faster and 40% more power-efficient than Nvidia’s H100 chip, the industry standard for GenAI models. At least Intel’s new chip will be available in the coming weeks… unlike the multi-billion dollar fabs it desperately needs to outshine its competitors.
