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While Zino recognizes Intel’s competitive merit as a manufacturer outside of Asia, investors may want to see more action to shake things up: “That $8. 5 billion will help, but at the end of the day, they’re going to have to continue to use essentially all the money they generate from their core business to continue to grow this foundry expansion initiative. So if we take a look here at the next few years, we expect them to potentially be number two in our “Three Players in the Foundry Aspect where Taiwan Semi (TSM) will continue to lead. “
For more information and the latest market actions, click here to watch this full episode of Yahoo Finance Live.
The U. S. government has not yet been able to The U. S. Department of Homeland Security has granted Intel (INTC) up to $8. 5 billion in chip production investments through the CHIPS and Science Act. Angelo Zino, senior equity analyst at CFRA Research, joins Yahoo Finance to discuss Intel’s position in the competitive semiconductor landscape.
While Zino recognizes Intel’s competitive merit as a manufacturer outside of Asia, investors may want to see more action to shake things up: “That $8. 5 billion will help, but at the end of the day, they’re going to have to necessarily continue to use all the money they generate in their core business to continue to grow this foundry expansion initiative. So if we take a look here at the next few years, we expect them to potentially be number two in our top 3 players on the foundry side, where Taiwan Semi (TSM) will continue to lead. “
For more information and the latest market actions, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article is written by Nicholas Jacobin
JULIE HYMAN: It’s time to pause with the Federal Reserve and move on to one of the trends of the day. As Wall Street closes, we’re keeping an eye on Intel stock. Today, the stock is only up about a quarter of a percentage point, yet learned that the U. S. will provide the company with up to $8. 5 billion for chip production under the CHIPS and Science Act.
CEO Pat Gelsinger said this is a watershed moment as the U. S. and Intel work to drive the next bankruptcy of U. S. semiconductor innovation. The company also said it could raise more cash in terms of tax incentives and loans. Here, to learn more about Intel’s position and the competitive semiconductor landscape, let’s hear from Angelo Zino, senior equity analyst at CFRA Research. Angelo. . . I can’t even talk after the Federal Reserve. . . It’s good to see you. Thank you so much for being here.
So, you know, we were very much hoping that Intel would get one of those grants, right?So what happens now regarding how this affects the investment case for the company?
ANGELO ZINO: yes, so no, thank you for having me, Julie. And I guess the inventory doesn’t scale much, because it’s in line with what I had expected and what other people were forecasting, between $8 billion and $10 billion or so. Perhaps others expected even a little more.
But that being said, this is a company that’s going to spend over $100 billion in capital expenditures, to grow and grow its foundry business. We’ve noticed. . . We’ve noticed that they spent over $20 billion in the last two years. We expect them to spend more than $20 billion this year and the next two years.
So it’s a corporation that spends a lot of money. That $8. 5 billion will help. But at the end of the day, I mean, they’re going to necessarily have to continue to use all the money generated by their core business to continue to expand this foundry expansion initiative. So if we look here in the next few years, we expect them to potentially be a number two or third player on the foundry side, where Taiwan Semi will continue to lead.
But listen, what everyone expects and looks for right now if you’re an investor is that you’re looking for more profit from the customer’s perspective. I think the total price of the deal announced about a month ago is about $15 billion. It’s not much there. That’s why we want to see more in terms of Intel orders.
JOSH LIPTON: Angelo, look at Pat Gelsinger, who’s been the CEO for three years, came in with this recovery plan, a big recovery plan, focused on design and manufacturing. He said early on, you know, Angelo, he said he thought it would take about five years. So we’re halfway there. You know, as a money analyst covering the company, Angelo, I’m curious what score you’ve given Gelsinger so far. What do you think of their performance?
ANGELO ZINO: I mean, listen, I think he gave a very, very complicated hand, right?I think he did the most productive thing he could with that. I think he’s making all the right decisions. It’s not a company that’s necessarily going to be a winner on the AI side, but I think it is: where it has competitive merit over others is in its production presence.
So, being able to see some of the geopolitical pressures, the desire to have another player outside of Asia, I think it’s the right decision. And I think at the end of the day, they’re going to win a lot. of the business. The explanation why we got a recommendation to suspend in the last 3 years is that we knew it would be a plan for more than five years. And so, if you’re an investor, the opportunity charge of owning or owning Intel compared to virtually any other company in the semiconductor industry, especially some of the AI-oriented companies, like Nvidia or AMD, is surely huge.
Then we give it an A-minus, let’s say. But in the end, he had a very complicated hand. And it’s not necessarily their fault you didn’t. . . You know, if you haven’t noticed capital appreciation in terms of stock market performance.