Intel's foundry push has 'potential' but competing with Taiwan Semi will take years
Feb. 22, 2024 12:32 PM ET
By: Chris Ciaccia, SA News Editor
 Leon Neal
Intel's (NASDAQ: INTC) foundry event on Wednesday highlighted a new partnership with Microsoft ( MSFT) and advancements related to artificial intelligence. But for all of its progress, the Pat Gelsinger-led Intel is still far behind the biggest players in the space, analysts said.
"As Intel aggressively develops its foundry business, it might not be surprising to see additional client/supplier partnerships ahead, yet we see execution, scale, and yield rate to remain as the keys for foundry competition," Bank of America analysts led by Brad Lin wrote in an investor note.
At the event, Intel added the 14A node for 2027 and maintained that its roadmap of five nodes in four years is on track. Despite the new partnerships (including with Arm ( ARM) for system-on-a-chips) and new advanced system assembly and test capabilities, it still has a lot of catching up to do.
"We expect [Taiwan Semiconductor] to stay ahead of Intel, thanks to its technology leadership, better cost structure, and optimal business model," Bank of America analysts added. The firm maintained its Buy rating on Taiwan Semiconductor (NYSE: TSM).
In addition to the Microsoft announcement, Intel alluded to Broadcom ( AVGO) and MediaTek as customers for its foundry business.
The nascent unit, which has been a big push for Gelsinger as he tries to turn Intel's fortunes around, recorded $291M in revenue during its most recent quarter. For comparison purposes, Taiwan Semiconductor generated $19.62B in the same period.
Cantor Fitzgerald was slightly more positive on the event than Bank of America, as analyst C.J. Muse believes it highlighted Intel "as the real deal as a potential foundry," even if there is more work to do.
It's possible GlobalFoundries could be a "likely strategic fit" for Intel, Muse added, though the company's recent partnerships with United Microelectronics ( UMC) and Tower Semiconductor ( TSEM) make that less likely.
Muse reiterated his Neutral rating and $50 price target on Intel. |
