Wednesday, June 21, 2023

Chips: With All The Capital Expenditures, Intel May Be Setting Up For A Spin-Off (INTC)

This is getting to be serious money:

June 20: "With $11 Billion In Subsidies, Intel To Build $33 Billion Plant In Germany (INTC)"

June 18: "Intel to build $25 billion advanced chip plant in Israel, Netanyahu says"   

In fact, those deals were so big I didn't even post on the money going into their plant in Poland. From The Register, June 16: "Intel to build $4.6B assembly, testing site in Poland"

Lifted in toto from MarletWatch, June 20:

Intel stock drops as foundry capacity buildout plans have one analyst predicting a company split  

Intel Corp. INTC shares underperformed peers Tuesday following announced plans of a capacity buildout ahead of a presentation to investors Wednesday. Intel shares dropped 4% in recent activity compared with a 1% decline of the PHLX Semiconductor Index SOX and a 0.6% decline on the S&P 500 index SPX . 

In a note Tuesday, UBS analyst Timothy Arcuri said he expects Intel to provide an update on its product roadmap, and customer adoption of its foundry services business, or IFS. Intel confirmed reports from over the weekend that it was building new foundry capacity in Germany and Poland. 

“We have long argued that if Intel is truly going to pursue an external foundry model — which at this point would be hard to backpedal from given its pending acceptance of significant amounts of CHIPS Act money — it needs to cleave the manufacturing assets from the product businesses,” Arcuri said. “Essentially, we argue Intel likely splits into a foundry business and a fabless product business and the segment P&L is a big first step.” Arcuri said “such a separation is necessary because there is not a single potentially significant customer that tells us they would make a big commitment to Intel foundry as long as it would be competing with Intel for the best wafers, highest yielding lots, etc.”

Also at MarketWatch, June 20:

Nvidia could be the most valuable company in a few years, this analyst says

The Polish plant is in Wroclaw about which we sang, in "Are Ukrainian Farmers an Endangered Species?":

"How you gonna keep 'em down on the farm after they've seen Wroclaw?"

Seriously, it's a lot more enticing than most parts of Ukraine. Or San Francisco: