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Intel foundry push faces test after 45% October stock drop
Intel is shifting some Oregon 18A capacity to Intel 3 server chips as its stock logged a record monthly drop after a weak PC outlook, CNBC reported.
- New headline Was: “Intel foundry push faces critical test after stock's 45% plunge in October”
- Our desk filed its story
Intel is shifting some Oregon factory capacity from its advanced 18A process to older Intel 3 wafers for data-center chips as investors punish the stock after a weak personal-computer outlook, CNBC reported Monday1.
Shares fell 29% on Friday, which CNBC said was the worst session since the 1970s, leaving the stock down 45% in October, the steepest monthly drop on record according to FactSet, and another 8% in Monday trading1.
On Thursday Intel said current-quarter revenue would be $1 billion to $2 billion short of analysts’ estimates as the PC market, still about half of sales, is hurt by soaring memory and component costs and slower upgrades1.
The company has spent about half a decade and a large share of $108 billion in capital expenditures trying to challenge Taiwan Semiconductor Manufacturing Co. as a contract manufacturer, CNBC said, but still has no marquee customer for its most advanced chips and mainly builds for itself1.
CEO Lip-Bu Tan said he sees the global server-processor market growing as much as fivefold over five years to about $200 billion; Intel’s data-center business grew 78% year over year in the third quarter to $7.3 billion, according to CNBC1.
Intel said it cannot make enough chips to meet that demand because of industry-wide limits on wafers, substrates and memory, the same constraints weighing on PCs, CNBC reported1.
Redirecting Oregon 18A capacity to Intel 3 could complicate efforts to win outside foundry work, CNBC said, because 18A is the node Intel is counting on to attract those customers1.
David Yoffie, a Harvard Business School professor and former longtime Intel director, told CNBC that customers worry Intel is not a credible supplier if it lacks capacity beyond its own needs, and that economics would worsen further without a large-scale foundry customer within a year1.
Intel did not respond to CNBC’s request for comment1.
Tan has limited spending until demand is locked in and said Thursday that a couple of customers would be announced in the coming two quarters, CNBC reported1.
CNBC said 18A chips for Intel’s own use are in high-volume production in Arizona, with a second Arizona fab planned, while a first structural truss was installed at a delayed Ohio plant1.
Yoffie argued Intel should spin off foundry, calling that perhaps the only way to ease customer concerns about competing with Intel’s product business; Mizuho’s Jordan Klein told CNBC that AMD is likely the only major chipmaker uninterested in manufacturing at Intel for competitive-secrecy reasons1.
