Intel (NASDAQ: INTC) The stock is losing ground in Tuesday’s trading. The semiconductor company’s stock price was down 2.6% as of 1:45 PM ET, having fallen as much as 3.2% earlier in the daily session.
Intel shares fall next today Taiwanese semiconductor manufacturing founder Morris Chang made comments criticizing the American company’s strategy and execution in chip manufacturing. TSMC is the clear leader in the semiconductor manufacturing market, and Intel has spent billions trying to match its rival’s manufacturing capabilities.
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Following the recent departure of former CEO Pat Gelsinger, Chang yesterday criticized Intel’s move into the chip foundry business. Chang indicated that Intel should have focused on improving its position in artificial intelligence (AI) chip design, rather than trying to become a major player in third-party chip manufacturing services.
Intel occupies a unique position in the semiconductor market because it has significant manufacturing capabilities in addition to its design operations, and because the company produces many of its own chips. Meanwhile, most other chip designers choose to have their chips manufactured by a third party – and no company comes close to TSMC’s position in the factory space. Intel has invested to improve and expand its manufacturing operations, but big wins in this category have so far proven elusive.
Regarding Intel’s current situation, TSMC’s Chang said: “They currently have neither a new strategy nor a new CEO. Finding both is very difficult.” While Chang’s assessment of his competitor’s situation seems grim, it highlights some of the challenges Intel currently faces.
The company is facing pressure from rivals and others Advanced micro devices And Arm in the central processing unit (CPU) design market, and the foundry initiatives were heavy on costs and low on results. Appointing a new CEO and deciding what the company’s strategy will be are important first steps in a new turnaround, and Intel will have to determine whether it will continue with a modified version of its current approach or take a radical course sail.
Deciding whether to keep the design and foundry operations under the same corporate roof appears to be the most important strategic issue facing the company at the moment, and other units could also be sold. But while Intel faces a difficult path forward, it’s possible that its shares could stage a significant recovery once the uncertainty is cleared and the new strategy becomes clear.
After the current sell-off, Intel shares are down 60% in 2024.
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Keith Noonan has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices, Intel, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: Short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.
Why Intel Stock Is Falling Today was originally published by The Motley Fool
