Intel’s Multi-Billion Dollar US Foundry Expansion Is Killing Its Stock, But It Could Also Save Its Future – The Average Joe
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    Intel’s Multi-Billion Dollar US Foundry Expansion Is Killing Its Stock, But It Could Also Save Its Future

    Noah Weidner

    April 29, 2024

    What stings more than seeing one rival’s stock rise 200% in a year? Watching another’s climb 700%. That’s the situation Intel ($INTC) has found itself in. Once a proud pillar of American tech, Intel has slipped behind competitors Nvidia ($NVDA) and Super Micro ($SMCI), leaving its stock trailing. But Intel has a turnaround plan: it’s diving into making chips for its competitors — a costly but necessary move to remain relevant in the fast-paced semiconductor industry.

    Not so chippy: In its first quarter report, Intel’s revenue jumped 9% — but it also posted a $400M loss. For the first time, Intel made money from its chip-making arm, Intel Foundry, bringing in $4.4B in revenue (about a third of its total). But those billions came with a landslide $2.5B operating loss in the unit — turning an otherwise positive quarter into a dumpster fire.

    • These losses add to the $7B Intel Foundry lost in 2023, totaling a massive $9.5B setback for Intel’s domestic chip venture so far.
    • That’s more than the $8.5B in grants Intel is set to receive under the CHIPS Act.

    Waiting for the payoff

    With losses fast-outstripping its revenue growth, Intel’s stock has plunged over 34% year-to-date, making it the second-worst-performing S&P 500 stock. But there’s no turning back now — and investors might have to wait a while for Intel’s multi-billion dollar expansion bet to start paying dividends.

    • In 2026, Intel plans to open its first new US fab in four decades, with plans for at least six more, each costing ~$30B — three times more than initially projected.
    • These fabs will make Intel the world’s second-largest foundry, trailing only Taiwan Semiconductor ($TSM) and surpassing Samsung.

    But until then… Intel will lean on TSMC, one of its biggest rivals, to manufacture its new Gaudi 3 AI chip — touted 50% faster and 40% more power-efficient than Nvidia’s H100 chip, the industry standard for GenAI models. At least Intel’s new chip will be available in the coming weeks… unlike the multi-billion dollar fabs it desperately needs to outshine its competitors.

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