Tag Archives: AMD

Buy Intel Before It Brings Chip Production to America

Backed against the wall by the rise of Taiwan Semiconductor (NYSE:TSM), Intel (NASDAQ:INTC) is putting all its financial chips (and more) on the line, which has big implications for INTC stock.

An Intel Core i7 chip in clear packaging is placed next to a metallic Intel (INTC) sticker.An Intel Core i7 chip in clear packaging is placed next to a metallic Intel (INTC) sticker.

Source: dennizn / Shutterstock.com

CEO Pat Gelsinger has promised to bring half the semiconductor industry to the U.S. and Europe if governments cooperate. China’s rise as a technology power is being used to bring in government cash.

Intel has plans to spend $100 billion each in Europe and the U.S. over 10 years, but Gelsinger needs government subsidies to back his play. Intel had less than $25 billion in cash at the end of June, and nearly $32 billion in long-term debt against a market cap of $220 billion.

Chips on the Table

Markets remain skeptical. Taiwan Semi is now worth nearly three times Intel at $641 billion. It has mastered the ultraviolet techniques to bring circuit lines within just two nanometers of each other, while Intel just promises to learn how.

Chip-making gravitated toward China and Taiwan in recent decades because of lower labor costs and fewer environmental strings. Intel was part of the trend, with fabrication plants in Ireland, Israel, and Dalian, China. Intel also has assembly plants in Chengdu, China, along with Vietnam and Malaysia.

Now Gelsinger wants to reverse all that in a decade. He calls his plan Integrated Device Manufacturing (IDM) 2.0. It was launched with $20 billion for two new Arizona fabrication plants. Intel has since announced an ambitious fabrication roadmap, with circuit lines 2 nm or 20 Angstroms apart by 2025.

Gelsinger is also promising to remake Intel’s insular corporate culture. Intel is becoming a “foundry,” Gelsinger said, making chips for rivals as well as itself. He reportedly made a $30 billion pitch for Global Foundries, spun out from Advanced Micro Devices (NASDAQ:AMD) 12 years ago and now controlled by United Arab Emirates money. After expressing initial interest, Global is now preparing its own IPO, valuing itself at $25 billion.

A Rocky Present for INTC Stock

Intel’s present is nothing like Gelsinger’s promise.

Intel’s current chips keep losing share to AMD in the data center. They use too much energy, says Cloudflare (NYSE:NET), which rejected Intel chips for its homebrew servers. Cloud czars like Apple (NASDAQ:AAPL) are also starting to produce their own chips, using designs from Arm Holdings, which Nvidia (NASDAQ:NVDA) is trying to buy from Softbank (OTCMKTS:SFTBY).

Right now, Intel is a no-growth company in a fast-growing industry. Second quarter net income of $5.1 billion, $1.24 per share, was little changed from 2020. Revenue of $19.6 billion was flat, too. By contrast Taiwan Semi sales grew almost 20%, and net income by 11%, in its second quarter report. The Taiwanese company is matching Intel’s moves in Arizona with a $12 billion investment, but still makes most of its chips in Taiwan.

China’s growing threat to take over Taiwan as it did Hong Kong this year is giving Gelsinger his chance. Intel is not only working with governments on subsidy arrangements but with Taiwan Semi itself, which will produce 3 nm chips for Intel starting in 2022. Chinese plants, by contrast, are still making chips with circuit lines 14 nm apart.

The Bottom Line on INTC Stock

If Gelsinger’s plans come off, Intel stock is dirt cheap. Despite paying a dividend that yields 2.6%, Intel is now worth less than half fab-less Nvidia and nearly twice AMD. Analysts haven’t gotten on board, either, with 7 of 26 at Tipranks telling customers to sell INTC stock and only 9 saying buy it.

For the first time since the 1970s, then, Intel stock is a speculation. But I shudder to think what might happen to America’s global competitiveness if Gelsinger’s plans fail. I’m a buyer.

On the date of publication, Dana Blankenhorn held long positions in NVDA, TSM, AAPL and INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

AMD Stock Settles Into Second Bullish Pattern: Will History Repeat?

On Aug. 23 Advanced Micro Devices, Inc (NASDAQ:AMD) broke up from a bull flag pattern called out by Benzinga on Aug. 18. A number of options traders must have seen the move coming: on Aug. 23, the traders bet over $1.6 million AMD’s stock would rise.

On Wednesday, it was reported the U.S. Department of Energy was nearing a deal worth $500 million to purchase a supercomputer made with AMD and NVIDIA Corp (NASDAQ:NVDA) chips.

The government initially planned to use chips made by Intel Corp (NASDAQ:INTL), but Intel is experiencing a production delay.

The AMD Chart: After breaking from the larger bull flag created between July 28 and Aug. 22, AMD shot up almost 4%. The stock has since consolidated the move by trading sideways. The rise up between Monday and Tuesday paired with the consolidation on Wednesday and Thursday and has settled AMD’s stock into another smaller bull flag pattern.

On Thursday, AMD was printing a long-legged doji candlestick on the daily chart, which indicates every time the stock traded down toward $106.84 level, bulls came in and bought the dip. The long-legged doji candlestick could indicate the bottom is in and that AMD may trade higher on Friday.

AMD is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators.

AMD is also trading about 22% above the 200-day simple moving average, which indicates overall sentiment in the stock is bullish.

Bulls want to see big bullish volume come in and break AMD up from the bull flag pattern. The stock has resistance at above at the $111 level, and after that there is no further resistance until AMD’s all-time high of $122.49. Bears want to see big bearish volume come in and drop AMD below support of the eight-day EMA, which would negate the bull flag. If the bull flag is negated, AMD could drop toward a lower support at the $103.83 level. Below the level, there is further support at $99.23.