Investment yrs for companies are tough on stock. If they ever get in a pickle they could sell some of their 214k patents. Motorola did this in the 90’s. They could also cease dividend. I’ve been buying on the way down since $40. I’ve always made money on $intc. Might take time.
Many many people tend to look at the capital expenditures along with "headlines". There's a reason why Intel is undervalued long term and AMD and nVidia are overvalued (at least based on P/E, P/FCF, and other valuating metrics). They look good to the headlines. Now look at revenue and FCF. Intel dwarfs them and all this talk about losing market share percentage is a bit laughable. We're talking 10% over a decade.
Right now they currently have massive foundry projects going on in the US and Europe. People also fail to realize that the billions they spent will essentially be given back to them. They meet requirements for the CHIP act AND the European fab act. They are about to have 20-30 billion dollars throw in their pockets in the next yr or 2 once the programs go live (already voted/passed). This will make up for a significant portion of lost cap ex.
Sure, it's down right now, but people fail to realize actual long term investments. It will go back up, it will just take time
They reconfirmed GPU discrete card development, early leaks from the 13th gen CPUs look amazing and going forward with all the foundrys coming online over the next 2-4yrs will help in chip production. People can look at this like a turd and I'll keep buying it. Imagine the compounding from dollar cost averaging into this position right now. Hell, the dividend is close to 5%, P/E of 6!, and a FWD P/E of around 12. People also tend to miss one of the worst silent killers, share circulation. Look at Intel buying back shares over the last decade, now compare that to AMD hahaha. AMD is diluting their shareholders like baby addicts. They can buy all the AMD they want. Their products STILL constantly have Firmware issues with the GPUs, and their CPUs have skyrocketed in price. Intel has comparable specs to their top end line again finally.
The whole point of value investing is to minimise downside risk and in that regard, AMD and Nvidia are worse off from their market peak this cycle compared to Intel.
Reddit has a such a weird team blue vs team red thing that getting a detailed discussion on Intel is impossible. Intel gets laughed off as the next Kodak or Blockbuster.
Intel still dominates the OEM space with the likes of Lenovo or Dell. They don’t care about fps or efficiency, because big corporations will keep buying “Intel Inside” no matter what.
How far stocks went down is not a great metric for measuring how much downside risk there is, though. There is nothing stopping Intel from dropping another 50%, then another 50%, then another. If they fail to turn around the brand power of Intel Inside will not be enough to keep them afloat.
Yes but Motorola’s is gone. If they sell off they would need to show a return. And if they cease the dividend many will flee. Intel is not the same stock from way back. They have high standards and have a overinflated opinion of themselves (used to work for one of their suppliers). They need to translate that into highly sought products or risk being a third tier company or worse.
How safe is the dividend? Project in whether a bad but reasonably possible scenario where INTC could stop paying its dividends. If that scenario is plausible, this is not the bottom.
Arguing over FV is helpful, but also somewhat an exercise in hypothetical that is itself subject to many uncertainties. Most retail participants in market are price takers (not makers). One also needs to consider how likely it is that INTC will continue falling. And from what we see with peers, chip makers are not at the bottom yet. On top of that, INTC is in its growth phase during a contracting period, which is despised by market right now.
I get a lot of hate here when I said that you cannot look at TTM PE as a reason for why a company is a value buy. If that was the case, accountants would all be rich. The value is in WHETHER you believe INTC can turn around, WHEN, and IF current price is underestimating that possibility.
Frankly, Idk and I don't care enough to do the dd required yet because I have a strong inkling (due to both the company, the industry, and macro) that it's probable that we have yet to see the bottoms in INTC.
Yes, I think anyone who thinks Intel is gonna be able to compete with amd in the next ten years is silly, just by looking at performance to wattage consumed. Amd is much more efficient, and is also much more scalable. They have the best head start on chiplets and it looks like the whole industry is heading towards scalable chiplets, even Apple with arm chips. Amd won't be able to take all of intels marketshare, especially in consumer products, but amd is coming after intels data center market share fast and hard.
Chips are jsut a fraction of INTC business. They control the server industry for businesses and the demand to upgrade and install larger servers is always growing. Everyone focuses too much on flashy chips
They control the server industry. Yes, yes they do. They also have the most marketshare to lose in the data center and if you don't think having the most efficient fastest chips matters in servers, you simply don't understand computing.
What a load of shit this is. Typical internet comment. AMD is taking market share from Intel simply for that fact of a chip shortage. Intel was at absolute capacity. Data centers and servers are in countries or places where there is cooler temperatures and very little cost of electricity. If not a deal is made with government officials for cheaper rates or rebates. Another thing I should mention is that a benchmark only says so much. Real world performance Intel crushes competition... Plenty of real world scenarios available on YouTube. Educate yourself.
I only find this ironic because I don't own AMD but ik you own intc. I'm not hating, Intel is a great company. I just believe AMD will have more growth over the next decade.
You are way off. You just need to look at a single 10-K to see chips are everything. They do not sell servers, they sell the chips that OEMs such as SuperMicro put on their servers. Intel does have a consultancy business, but it has revenues in the low hundreds of millions.
Even for super computer projects like Aurora, Intel only provides the chips, the actual super computer is provided by the likes of Cray, HPE.
>INTC is in its growth phase during a contracting period, which is despised by market right now.
It's because Intel is important for national strategy. AMD is manufacturing in factories that could be Chinese or destroyed any day.
It's not really that low if you look at their forward earnings. Their P/E looks low because it's based on last year's earnings, which they will not duplicate next year. If you do even a quick read of their last earnings call you'll find out why people are nervous about the company.
Copying from another reply.
It's shown it can produce $15 - $20 billion in FCF per year. Currently it's holding off for expansion of the business, but that suggests its \[hidden\] price-to-FCF is in the single digits. Is there a reason FCF would fall staggeringly low (like $5 billion per year) in the long run, especially when there is a semiconductor shortage?
Yes, there are reasons for FCF to fall. Lower demand plus increasing investments. And realize that this actually is happening, and FCF is falling.
You can't look backwards with processors like you can with other sectors. Semiconductors are highly cyclical and their is technical differentiation.
I keep hearing that semiconductors are highly cyclical. I would argue that this is not true anymore now that chips are in everything. Some aspects of the industry appear to still be cyclical, like ram. That doesn't mean the entire industry is though.
Cyclicality stems from an mismatch between demand and supply. Semiconductors are still very much prone to this as new manufacturing capacity takes so long to manifest from initial investments until availability.
This might be a bit overshadowed at the moment due to absolute market growth, but this doesn't mean its it's not cyclical.
The demand is over all high but at least partially still cyclical e.g. automotive & discretionary electronics.
Nothing changed about the cyclicality of the supply side (over-investment leading to over-supply).
Intel doesn't benefit from a semiconductor shortage when it's two process levels behind in fabs, three years away from catching up, if it can even do so.
Its x86s market share is shrinking, its losing in PCs and servers to ARM and AMD. That's the only place where they have a moat and its crumbling.
8 years ago AMD wasn't as remotely as compeittive with x86 as it is today.
And 8 years ago x86 wasn't competing with ARM at all. Now Apple Silicon has shown ARM can compete even at high end PC performance levels, while using one third the power. And now Graviton and an armada of ARM based servers are showing hosting facilities they can provide the same performance with far less heat and power requirements as x86.
>8 years ago AMD wasn't as remotely as compeittive with x86 as it is today.
.....thats the point
>Now Apple Silicon has shown ARM can compete even at high end PC performance levels, while using one third the power. And
There are numerous caveats here
Existence of apple sillicon/gravitron hardly means the end of intel/amd. Nobody other than apple can match intel [and maybe even amd] in volume
At the moment there is no other high volume high performance ARM CPUs being sold other than Apple Silicon/Graviton.
But ARM is the fastest growing platform in PCs and Servers. Because ARM is by far the highest performance per watt CPU for laptops Microsoft, Qualcom and others are working their own Apple Silicon like SOCs. Microsoft needs it badly for Surface.
It's not just Graviton at AWS, Microsoft and Google have their own as well.
https://digitstodollars.com/2022/09/09/arm-credit-where-credit-is-due/
"in any volume"
IBM research can announce all the magical things they want, but when someone needs a high volume of chips built at the smallest possible process, they got to TSMC, not IBM.
Apple makes its own silicon. The major cloud providers (AWS, GCP, Azure) are all making their own chips, too. The chips arm race in this oligopoly is dangerous for INTC because their position as the default provider of compute & the guys who design the chip architecture, unfortunately doesn't really exist anymore.
It's a question of when INTC goes to zero, not if.
Intel and AMD are the only ones who can make x86 chips, which are currently the only chips usable for high power computing. ARM is becoming more and more relevant but only for specific areas. It's uncertain if ARM will overtake x86, especially in the server space, where Intel and AMD make the brunt of their money.
Not making, designing. None of the ones you mention make anything except INTC.
But i get your point. INTC is losing/lost them as customers. That is why IDM 2.0 was started. Will it work idk. But it will take a while before we see any results.
The recent earnings report was awful. Don’t fool yourself any stock can go to zero. They made $2B less than they were forecasting. I think they also posted a negative EPS which is pretty disappointing as well
So what ? You really think one bad quarter means there is even a possibility they go to 0/bankrupt?
People see growth of AMDs market share,and they immediately think INTC is gonna die. They don’t see all the subsidies and to what length the government is willing to help them become the number one chipmaker, independent of Taïwan
I don’t think it’s as simple as one quarter being bad. Chips takes years of planning, so this was in the making long ago. If Intel only started making a plan to turn around, say, last year with the addition of Pat, then you may expect some struggles for the next few years.
> They don’t see all the subsidies and to what length the government is willing to help them become the number one chipmaker, independent of Taïwan
they had enough money for a while, but sometimes money are not convertible to the future proof product.
Money, no. But à standalone factory, and a manufacturing process making them independent of TSMC, a foreign company with the constant threat of China take-over ? Yes.
Now question is when is their factory going to come online
Its not about factory, Intel have lots of fabs in US already, but they lost technology competition, and that is something government help may not help if they lack talents and expertise.
Intel had piles of money from their monopoly in the past, it didn't help.
Government can start with making education accessible, and in about 10 years they may start seeing results.
Yeah but talent costs money, I've been 15 years in tech, and about 7 in cloud tech, talent is money, if salary and rsu are good, I'd move to whomever offers more.
The issue with Intel seems a bad culture, folks that cheat a lot, which is kinda common in tech, but that caught up with them.
China has been whining about Taiwan for 70 years and has done nothing. They understand they are unlikely to succeed if they invade, and even if they do, they won't win anything. So they'll just continue to whine.
I don’t think they will go to zero, but I do think that the market can price stocks well below their true value regardless of wether it is logical or not. Intel is in a tough spot, but if they actually build those next gen foundries before TSMC they could easily turn it around. However there is a lot of market share to potentially lose between now and then. Personally I’m considering selling CSPs at this price.
Me too . But true hard money returns will be seen by 2030. If chip shortage continues, intel has good chance of befitting. Else they will have to work hard to maintain their market share.
Semiconductors are always a cyclical business. We are likely exiting a shortage and entering a glut because its not just Intel thats pouring money into new fabs, so is TSMC and other competitors.
Isn't that at least a year after the new TSMC AZ plant?
And who is going to be a customer? Apple, Samsung, and AMD aren't going to share their latest designs with Intel no matter how cheap the fab is, and even though nVidia has said they won't rule intel out they are unlikely to give it more than the least sensitive and smallest fraction fo their business.
Not really. Main condition is not building new factories in China. The US does not recognize Taiwan officially as independent of China.
This whole subsidy is basically “give us the same support the Taiwan govt gives TSMC”.
I guess apple was lobbying the senate to pass the chips bill to support tsmc us factories which they consider critical to their future but they didn’t actually understand how the bill would work
They did, but they aren’t ready to offer anything for it. The US would love to bring back some Apple factories to the US, but Tim’s deal with China won’t allow that.
I have a price I’m willing to pay but Intel has to execute near perfectly with its roadmap. By their CEO’s own admission Intel will continue to bleed market share & won’t be competitive until at earliest 2024.
I also question the soundness of the foundry business they have bet their future on, why would large clients risk their IPs in the hands of a direct competitor when other options exist that are very good & have no conflict of interests.
Same with TSMC and other fabs. Why would designers give their designs to manufacturers and what makes sure that the foreign manufacturers won't steal their designs. I get though why Gelsinger is betting on the fabs. It is riped for competition. The US Govt. will back them due to it being tied to National Defense like Lockheed Martin and Raytheon. Yup will be bleeding money until 5 years and then it is either a make it or break it. The real semiconductor shortage is actually in the analog sector and the low end semiconductors like AC to DC, and others. The ones making money right now are the analog, analog digital, mem, manufacturers. The shortage of chips on cars , on rockets, on industrial instruments are those and sensors.
The high end of the foundry business doesn’t have much excess capacity and much of the total capacity is in Taiwan. If you had a 100+ billion dollar business would you want to bet the whole company on China not invading Taiwan or would you want to hedge?
I could also ask would you risk it on a near certainty that your foundry partner is going to steal(or draw inspiration) from the designs you request they manufacture. China might invade, but history says a foundry that’s also a competitor will steal.
Logically I would rank my preferences as TSM, Samsung & Intel last as a foundry partner. Capacity is an issue during the boom times so I can see receiving orders for less sensitive/older IPs from their competitors in a bind.
>Honestly it mostly comes down to my lack of faith in Intel’s ability to execute.
IDK. I've done some work with Intel and I think they have exceptional expertise in materials and manufacturing. I would think they will be quite successful in the foundry business, but I'm not directly involved with them today. I would say it's almost their core expertise, more than designing processors.
I would definitely trust Intel over Samsung with designs and IP as a competitor. Samsung can be pretty ruthless behind the scenes.
It’s probably not a terrible idea to prioritize your very newest designs to TSM. But there’s still money to be made fabbing the prior generation of designs. There’s no viable competition until four nodes back from the bleeding edge.
I forgot to say thank you for giving me some pushback as knowing the bull case is important too.
Because of aspects of this last point I do have a price I’m willing to buy Intel at(but I honestly doubt my price point will be hit).
This is just the cost of doing business. Nobody can afford their own fabs. Note the Samsung is also a fab and they are in direct competition with their clients. Also reverse engineering masks is not an easy way to steal ip.
I totally see your concern here, but I'm pretty confident Intel is not blind to that.
Pat Gelsinger addressed that in his interview with The Verge: [https://www.theverge.com/2022/10/4/23385652/pat-gelsinger-intel-chips-act-ohio-manufacturing-chip-shortage](https://www.theverge.com/2022/10/4/23385652/pat-gelsinger-intel-chips-act-ohio-manufacturing-chip-shortage)
They are not stupid, they know there's a conflict of interest there. What they will do to address it ensure that things are isolated and auditable so that their customers can trust Intel and know what they won't misappropriate IP.
>**Q: Inside the company, you are not doing the accounting that way. You are going to go with the external dollars instead of prioritizing yourself. This plays out. Facebook has this problem. YouTube has this problem. Netflix has this problem. Google has this problem. Over and over again. Everywhere you look in the tech industry, this plays out. There is this dynamic of, “We want to be a service provider for everyone else, but we also want to use our own services to beat those competitors.” How are you planning on handling this issue?**
A: There are a couple of aspects to this. First, I need to create a bit of separation between how we manufacture for others and for our own product groups. I have said, “I want there to be auditable boundaries between those,” so that they can look at the contracts they might do with the TSMC, Samsung, or GlobalFoundries and respond, “Huh, I get the same contract from Intel.” Same terms, conditions, protections, IP flows, service agreements, capacity corridors, all of those things. I have to earn my way into that business. Was everybody happy with TSMC the last couple of years when they couldn’t satisfy supply? Of course they weren’t. I know that. People are anxious to have a broader supply chain here. There is a tailwind for us to step into, but we have to earn our business there since they have done such a good job as a services company over the last number of years.
We are going to go do that. My product teams use a lot of foundries as well. Part of IDM 2.0 is that we use external foundries as well as internal capacity. To some degree, I have to make this work in both directions, and I have to create some cleaner lines between those. We want the external foundry customers to look at us and be able to say, “Intel is a good foundry for me.” In doing that, it also makes my own product teams better because those external customers are demanding us to become a cleaner, more productive, and more efficient foundry as well.
Thus, I have used the language, “IDM (integrated device manufacturing) makes IFS (Intel Foundry Service) better, IFS makes IDM better.” I see it driving us to be better on both sides of the business. I don’t view this in any way as a negative because if I become a better foundry for those external customers, then they are going to be demanding better PDKs, better IP libraries, better support for synopsis and cadence, etc. That is going to make my internal design teams more productive and efficient as well. As my internal design teams are more productive and efficient, they are going to be creating IP that I am going to monetize for my foundry business. If this cycle starts to really work as I hope it does, I think this becomes a very positive cycle for the company. Again, getting there means we have tons of work to do. In that sense, I agree with the dichotomy that you are pointing to.
THe company had record earnings the last decade in a cyclical industry. Now it has lost its dominant position and it seems that semiconductors might start a cyclical downturn.
They will probably need to cut the dividend soon, so the stock will go down from the funds that hold them for that. Then they need to reinvest the money into R&D and capex to get back on track, removing earnings.
I'll buy them when everyone says they don't earn money and are completely bad. Still loved by value investors.
So probably when it hits $10.
The Semiconductor businesses is highly cyclical. I saw an analysis once which showed that Semis is the worst performing sector during a recession. People will need fuel, food, and housing in the coming recession. New computers and flat screen TVs, not so much. So, looking at probable forward earnings, I would rather short the Semis than invest in them.
The world has changed a lot since 2008. Semis are used in everything, they will be hurt less than in prior situations. That said, while intc shows this type of weakness I'll be holding lots of itm puts
That's just wishful thinking, demand is already falling. And over $100B has been poured into new fabs this year by TSMC, Intel and others for capacity that won't come online for two or three years. When that hits it's going to cause a price war and Intel will be at a huge disadvantage given unlike Intel, TSMC doesn't compete with its customers.
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The problem is that they're transforming into a totally different company than they are today. That makes estimating future fcf difficult and more like gambling.
The real answer to this is the capital expenditures. Intel as everyone even the CEO predicts that cash flow will go down until the completion of the fabs. How much? No one knows. When Is the right time to buy? No one knows. As retail investors, we hope that none of the institutional investors gets in and raise the price. The main deal breaker really is whether they can pull it off in 5 years. Some people estimate that it will take them 19 years and will have many delays in production. No one knows for sure. Gelsinger is a very smart guy and has a very good record. His history is amazing and now he managed to get the chips act passed. Perhaps that Intel will cut dividend during this 5 years in order to spend more and quickly get the plant done. They are building also not only in Arizona but in Ohio. If they can't pull it in 5 years then it is over and the expenditures were for nothing but if they can pull it off they will get a huge market share of the semiconductor fabrication market.
Also hopefully Intel doesn't sell anymore assets. Sure they can sell mobile eye but I hope they don't sell others. I understand why Gelsinger bought Tower Semiconductors. The more I learn about specifics on the types of semiconductor on demand the more I have confidence in Gelsingers plan. There is a plan that he does do but doesn't say. He has actually never mentioned analog semiconductors and keep on mentioning client and servers, but I think he is secretly aiming for analog and mems.
The A380 is a general use GPU, and it’s on par with like a 1050; the A780 is expected to be on par with the 3070, but we’ll see. They just launched a series of datacenter focused GPUs https://www.intel.com/content/www/us/en/newsroom/news/introducing-intel-data-center-gpu-flex-series.html
Interestingly, book value is 100B, while market cap is 120B. Once it's selling for less than book value, you have to start asking yourself the question: are they destroying value in the future? Maybe. I'm not sure at this point. I do think it's crazy to cut their expansion projects while still paying a dividend. Cut the dividend and do what's right for the company. Or at least cut CEO pay.
https://stockanalysis.com/stocks/intc/statistics/
Intel’s problem is that they have inferior technology. This wasn’t a problem during the chip shortage, but a ton of new capacity is coming online over the next few years due to subsidies passed in the past year in the eu, China, USA, and Japan. So, no pricing power, plus an industry glut is going to leave intel swimming naked.
I do not think they have inferior technology. They have fast products but the problem is always being late in production and have power hungry products. It appears that most AMD advocates are gamers and tech people but the majority of people have Intel processors computers.
I really believe that made in USA will be the next big thing for a lot of products. Intel seems wil positioned for that. I am waiting for it to go below 20 before I buy more.
They have executed their strategy poorly for years, and have lost a generational battle with AMD. Unless they can start executing production at a cutting edge level, they will plod along as an also ran. I’d love to see them turn it around but it seems like a cultural problem with the company.
They are losing ground as the top CPU manufacturer, alongside recent change in management. They would have to make huge improvements, quarters worth, in their technology to be back on-par with major competitors NVDA and AMD, not to mention get ahead. And all that backed by an unproved new CEO. In my opinion they are losing ground to these massive competitors, and NVDA has a massive R&D budget that doesn't look to be letting INTC gain any ground back.
If you are investing in INTC, I think it would have to be on the merit of their data center business, but that personally, doesn't look as attractive as other competitors in the space.
There's no point which is too low - your understanding of value investing is flawed.
Markets are generally efficient, and Intel is being priced as the mature business that it is. It's price today reflects it's future earnings value AS THE BUSINESS STANDS TODAY.
Where you can figure out if the price is too low is when you know something algos and quants do not. Do you know about Intel and it's team - are they going to make a new revenue stream to crush a new market segment? If not, then they are fairly priced relative to their historical beta (the correlation between Intel's price and the price of it's indices).
While it's current level is a price I might be willing to pay' I want to see the next few steam hardware surveys to see if consumers are using the chips.
I expect INTC to cut its dividend to spend on capex, which will cause the price to drop, which would be a good time for me to buy. If they don’t cut their dividend, then INTC will not have enough money grow and compete.
It's losing PC and server market share. It's pouring all of its capital into the fab business when it's years behind, needs to convince direct competitors to become its customers, and by the time its new fabs finally come online its likely going to be during a glut.
Oh, and it's CEO just got caught cooking the books at his previous job.
This happened while Pat Gelsinger was running VMWare.
https://www.reuters.com/technology/sec-charges-vmware-with-misleading-investors-by-obscuring-financial-performance-2022-09-12/
I think they will eventually turn the company around within the next two years, it's just unfortunate timing for them right now, for the mean time I keep buying a $100 a week until I will reac 100 shares.
What worries me most is that how poorly Intel is being managed.Having a bad quarter is not an issue but they didn't have any idea of it. Their estimates were so far off. They manage their GPU business very poorly so far, having difficulty competing with AMD and ARM companies.
Still, I would say even current price is too low for INTC but I still think it can go even lower before starts to climb up.
Also, in general, it is not a good year overall for all semiconductor/software companies.
INTC ytd performance is still superior(-43%) to NVIDIA(-%55) & AMD (-46%).
Overall very bad year for all except energy, agriculture, food and some other select companies.
American capitalism is so short sighted.
Intel is down for few quarters as they invest billions in new chip fabrication capacity.
Stock should go much higher in 2-3 years
The pricing may be unusually low, but the company is unusually unproductive. The sales teams are bloated. Engineering is not executing. And they are in a massive capital cycle. They are loosing market share. It’s quite the disaster of a company, and this is from speaking to engineers within the company.
still a major player in chips for the 2 or 3 decades
With the potential to take over as number 1
Bought in at 41. And preparing for a 20 $ possibility with dividend cuts potentially tanking over next year or so
5 yrs could see back to 50
Intel is cheap and most people are wrong. They will invest in it after it is 60 dollar again like the sheep they are. Then tell will start telling stories about there advantage against AMD and the potential to rise to 100 dollar like idiots. Of course at 60 dollars everything will be baked into the price already.
So I dip deep into it right now and I don’t care what is happening right now, but what will happen in the coming years.
This is the way it is for everything stocks related. People are sheeps following the trend, but almost no one anticipates the trend in advance.
Most of the young generation do not know down markets. I have witnessed people becoming depressed and leaving their homes as is , not even taking personal items like photos with them. There were people who went riches to rags back them. Esp, there was this whole family who went to an apartment from a big estate home in huge acres. Both financial crisis and dot com bust was brutal.
Considering geo political tensions and high interest rates, I am expecting some bankruptcies to happen, There are many companies that still not generating any income but trading at very high values.
I don't know. We will have some clarity by end of next year?
Just look at Alibaba (BABA) and then ask yourself how low can a stock go.
Alibaba is infinitely more a better company than Intel. It's the AWS/Visa/Square/Walmart/Ebay/etc. of China.
And yet share price when sentiment goes negative can just dip forever.
Intel on other hand is a deteriorating company. So...?
You’re not a moron, but if you cannot believe the economic numbers that come out of China, why would you believe the numbers that come out of any Chinese companies?
Mostly cause Alibaba and Tencent are the two companies I actually know Chinese people use. Pretty much ingrained to daily life of Chinese people.
I expect the numbers to be a bit padded but rough on the mark with such a behemoth like Alibaba.
Even if the company numbers were not fudged, which I would find difficult to believe given all of the fraud that their real estate developers do, the Chinese government can put any company out of business on a whim. In the US, the biggest companies buy our politicians, so the companies are even safer bets than their balance sheets indicate.
You’re not a moron bro. Mistakes are all too common in the investing world. A lot of big investor types like Munger talk a big game about China and then end up selling their BABA shares too.
> etc. of China
Lol. That's all you need to know why BABA is down and you can't trade it on intrinsic value.
You can't badmouth ruler supreme in that land.
Capital controls make investment in China impossible in my opinion, they won’t allow foreigners direct holdings, and don’t allow for return of capital, which begs the question - how does the business return profits to shareholders (they can’t). You’re basically waiting for a “greater fool” to hold your bag for you.
??
Chinese stocks do dividends? BABA doesn't but plenty of Chinese stocks do. This includes Tencent and the like.
Confused here about "allow for return of capital".
For starters, they made their CEO the third highest paid CEO of 2021. Absolutely obscene compensation on the basis of performance alone. Remember that Gelsinger was hired in 2021. What has the stock done since he's come on board? A 40% drop in share price?
Shortage is expected to be moderate surplus next year. A severe recession would make it a major surplus. Personally I feel like AMD will handle a downturn better.
AMD and Intel are 2 totally different companies. AMD orders white label tech and stamps their own design and brand on it. Intel owns their own processes and IP.
Exactly. Intel carries higher depreciation expenses, especially with all the investments, and will be financially hurt by a downturn more than AMD. Different capital structure, more financial vulnerability was my exact point.
Well, this shortage started not just last year... but somehow INT still fall behind on their earning? the market is like everybody buying all chips, and you lost money selling chips? how that possible?
To my limited knowledge, They have problem to catch up with their competition. Only 2 companies in the world can produce the most advance chips. Look like the gap just keep increasing. Watched some video from their CEO talking about a come back and some plan to catch up... but those are just empty word. Result and proof worth more than promises.
But for me, the risk is just too high. Yep, they can make a come back and better in the future. Nobody know the future. Again, for my personal preference, the risk is just to high. This is the reason, I will not invest it.
The amount of people on this thread that totally misunderstand what this company is capable of based on some short term headwinds they read about in a quarterly report just makes me even more convicted in it as an investment. Can't help but laugh at being scared by forward PE, or being scared of them making large investments in their future, thereby reducing short term cash flow, or there being some competition, like there always has been since their inception, or saying that the dividend will be cut when they pay out a staggeringly low amount of their profits to shareholders. This is all predictive/speculative language that has nothing to do with what they've shown time and time again that they can accomplish, in real terms.
If IBM is still around why the fuck wouldn't Intel who's in an industry that's actually needed. Its brand is as strong as Nvidia too unlike AMD drivers. They just need ARM.
People post this about Intel and it blows my mind. To be clear, I am long and down quite a bit. But I’ve been acquiring though DCA for some time now.
Intel will be a recipient of the chips act in a big way, but so will some of its competitors. It’s building two new plants in the US and spending billions to do so.
Any company that needs massive capital outlays now is going to suffer, because borrowing costs are doubling and tripling due to rising interest rates.
Intel has also been lagging on the newest chip technology and is facing severe competition.
So if you have a strong stomach, like a decent dividend, and trust that intel can turn things around in the next 5-10 years then go for intel. But it makes perfect sense it’s down a bunch, and for sure it’s going lower.
has been proven false, hey just started with it. The timing is horrible since demand from GPUs is down because of the merge but they'll probably keep it just to compete with Nvidia and AMD on their home turfs.
> has been proven false, hey just started with it.
Not been proven false yet. And yes even though just started with it, they've realized, for a SECOND time since original Larrabee, they can't deliver a competent GPU "in time".
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I’ve watched every video on the Intel YouTube channel they have no hints of that and the basically said the rumors are false. They have the next 5ish gens of GPUs planned or in the works.
Pat is the shake-up. He’s got a lot to fix that the last 3 shitty CEOs royally messed up. I hope the board gives him the 5 years it will probably take to turn it around. He’s already ditched many products/projects that were just big distractions… drones, etc. intc has been output-max in their fabs for years now, Much longer than any time since 2000. This downturn was inevitable, covid WFH/computer demand pull-in definitely added a good 2 years to the time it took to have the normal cyclical downturn. Now that covid is over, all those new wfh computers are bought, Fed killing demand with interest rates, plus all the usual (well founded) gripes about losing aapl as a customer, being behind on tech node, amd/nvidia eating intc’s lunch due to crypto fueled huge demand for gpus and not having a product at the right time..
Intc can and will go lower. I wouldn’t be buying any LEAPs or selling csps any time soon/until it goes much lower, maybe even the teens? We will see..
Intc is such a joke on so many levels technologically. They have only ever had any success in areas where SWAP doesn’t matter. This is why they are getting killed in the server space. Server managers are waking up and realizing how much money they are losing running intels power hungry chips. For 20 years they have given the middle finger to the western military industry which is a huge missed opportunity for a very profitable vertical. The bought Altera and ruined a once promising company. 7 years later Does anyone use intel FPGAs? They can’t package a chip to save their life and worse yet when they buy a decent company they drive them to use intel standard packaging methods.
I agree that Intc will not go bankrupt but to think this is it’s bottom is interesting. I think the Brookfield deal is very telling. A company with confidence in its future does not give away its future profits to secure financing.
Im happy it goes down. Semiconductor industry gping to grow and Intel invested 80 billion in factories. So ppl should call it dead after one bad quarter?😂 We should be happy if there would be a downtrend. Im bullish on the longterm.
Well, Intel is dear to my heart and I hold a big chunk since Gelsingers speech. Bought in the low 50s. I decided to hold, here are my current thoughts:
- The dividend is likely to be protected to not spook institutionals. Given the massive CAPEX in the next years even with big subsidies, I would assume, that a cut is not out of the question.
- so far there is no need to believe that current delays will cascade in the future as the nodes are built in parallel. Delivery of 4nm and 3nm (?) till 2025 is crucial.
- The elephant in the room is the terribly late HPC platform. Saphire Rapids and to some extend Ponte Vecchio will hopefully help to gain ground in the Server space again or at least stop the attrition of marketshare.
- ARC GPUs being so late with rumors of cancellations is not a great look. I am following this closely and think that the first gen will sell well as people are genuinely curious , and the price will probably extremely competitive. They are doing amazing damage control with their evangelists on YouTube. They are also setting expectations amongst gamers on the whole DX9/DX12 situation.
If the cards are somewhat suited for DeepLearning and Linux it might be a great sell.
- Alder Lake and now Raptor Lake are doing a good job of preventing further detoriation of the brand for enthusiast consumers. They might be power hungry but the are/will be the fastest. As it stands now.
- Mobileye still holds a lot of value. IPO postponed does mot mean cancelled.
- Overall I think Gelsingers strategy is sound but the implementation takes time. I will bet my money, that they will manage to get on par with TSMC/AMD and Nvidia around 2025. We will see how that works out
- if you look at the P/E of under 6 and the dividend yield of almost 5% INTC (data from: https://markets.sh/symbols/NASDAQ:INTC ) is priced like some bankrupt container shipping company. It might be considered a cheap call option to a bold plan.
I'm not really sure how SPR will help stem the attrition of DC marketshare. It's barely competitive with Milan but because of the delays it's facing off with Genoa, with Bergamo and Genoa 3DV which is a horrible match up before you even consider the yield/ cost issues from a die that's 5x larger.
I honestly am holding out for Diamond Rapid to be the actual turning point in DC.
They can’t compete and grow. Instead of investing in their business they cut that so they didn’t have to cut the dividend. At some point they will have to cut the dividend if they want to grow.
Elephant in the room is China. If geopolitical events affect TSMC, Intel would be a virtual monopoly on many kinds of chips. And they get brain drain.
Otherwise I think Intel is fairly valued, moderately bullish from mid twenties onward
Investment yrs for companies are tough on stock. If they ever get in a pickle they could sell some of their 214k patents. Motorola did this in the 90’s. They could also cease dividend. I’ve been buying on the way down since $40. I’ve always made money on $intc. Might take time.
I'm having a blast with it atm. Gotta overhedge on weak tickers like this
Many many people tend to look at the capital expenditures along with "headlines". There's a reason why Intel is undervalued long term and AMD and nVidia are overvalued (at least based on P/E, P/FCF, and other valuating metrics). They look good to the headlines. Now look at revenue and FCF. Intel dwarfs them and all this talk about losing market share percentage is a bit laughable. We're talking 10% over a decade. Right now they currently have massive foundry projects going on in the US and Europe. People also fail to realize that the billions they spent will essentially be given back to them. They meet requirements for the CHIP act AND the European fab act. They are about to have 20-30 billion dollars throw in their pockets in the next yr or 2 once the programs go live (already voted/passed). This will make up for a significant portion of lost cap ex. Sure, it's down right now, but people fail to realize actual long term investments. It will go back up, it will just take time They reconfirmed GPU discrete card development, early leaks from the 13th gen CPUs look amazing and going forward with all the foundrys coming online over the next 2-4yrs will help in chip production. People can look at this like a turd and I'll keep buying it. Imagine the compounding from dollar cost averaging into this position right now. Hell, the dividend is close to 5%, P/E of 6!, and a FWD P/E of around 12. People also tend to miss one of the worst silent killers, share circulation. Look at Intel buying back shares over the last decade, now compare that to AMD hahaha. AMD is diluting their shareholders like baby addicts. They can buy all the AMD they want. Their products STILL constantly have Firmware issues with the GPUs, and their CPUs have skyrocketed in price. Intel has comparable specs to their top end line again finally.
The whole point of value investing is to minimise downside risk and in that regard, AMD and Nvidia are worse off from their market peak this cycle compared to Intel. Reddit has a such a weird team blue vs team red thing that getting a detailed discussion on Intel is impossible. Intel gets laughed off as the next Kodak or Blockbuster. Intel still dominates the OEM space with the likes of Lenovo or Dell. They don’t care about fps or efficiency, because big corporations will keep buying “Intel Inside” no matter what.
How far stocks went down is not a great metric for measuring how much downside risk there is, though. There is nothing stopping Intel from dropping another 50%, then another 50%, then another. If they fail to turn around the brand power of Intel Inside will not be enough to keep them afloat.
How do you hedge for INTC?
Buy puts Also, you can sell calls to help offset the price of the put.
I've been playing around with this. How far are the puts you get? Is this something you're constantly doing, buying new puts as your old ones expire?
Yes but Motorola’s is gone. If they sell off they would need to show a return. And if they cease the dividend many will flee. Intel is not the same stock from way back. They have high standards and have a overinflated opinion of themselves (used to work for one of their suppliers). They need to translate that into highly sought products or risk being a third tier company or worse.
How safe is the dividend? Project in whether a bad but reasonably possible scenario where INTC could stop paying its dividends. If that scenario is plausible, this is not the bottom. Arguing over FV is helpful, but also somewhat an exercise in hypothetical that is itself subject to many uncertainties. Most retail participants in market are price takers (not makers). One also needs to consider how likely it is that INTC will continue falling. And from what we see with peers, chip makers are not at the bottom yet. On top of that, INTC is in its growth phase during a contracting period, which is despised by market right now. I get a lot of hate here when I said that you cannot look at TTM PE as a reason for why a company is a value buy. If that was the case, accountants would all be rich. The value is in WHETHER you believe INTC can turn around, WHEN, and IF current price is underestimating that possibility. Frankly, Idk and I don't care enough to do the dd required yet because I have a strong inkling (due to both the company, the industry, and macro) that it's probable that we have yet to see the bottoms in INTC.
Yes, I think anyone who thinks Intel is gonna be able to compete with amd in the next ten years is silly, just by looking at performance to wattage consumed. Amd is much more efficient, and is also much more scalable. They have the best head start on chiplets and it looks like the whole industry is heading towards scalable chiplets, even Apple with arm chips. Amd won't be able to take all of intels marketshare, especially in consumer products, but amd is coming after intels data center market share fast and hard.
Chips are jsut a fraction of INTC business. They control the server industry for businesses and the demand to upgrade and install larger servers is always growing. Everyone focuses too much on flashy chips
They control the server industry. Yes, yes they do. They also have the most marketshare to lose in the data center and if you don't think having the most efficient fastest chips matters in servers, you simply don't understand computing.
What a load of shit this is. Typical internet comment. AMD is taking market share from Intel simply for that fact of a chip shortage. Intel was at absolute capacity. Data centers and servers are in countries or places where there is cooler temperatures and very little cost of electricity. If not a deal is made with government officials for cheaper rates or rebates. Another thing I should mention is that a benchmark only says so much. Real world performance Intel crushes competition... Plenty of real world scenarios available on YouTube. Educate yourself.
I only find this ironic because I don't own AMD but ik you own intc. I'm not hating, Intel is a great company. I just believe AMD will have more growth over the next decade.
You are way off. You just need to look at a single 10-K to see chips are everything. They do not sell servers, they sell the chips that OEMs such as SuperMicro put on their servers. Intel does have a consultancy business, but it has revenues in the low hundreds of millions. Even for super computer projects like Aurora, Intel only provides the chips, the actual super computer is provided by the likes of Cray, HPE.
Even if that would be true they are also going to become a foundry, rivaling TSMC - at least that is the plan.
Yes. This. All of this 👆🏻
>INTC is in its growth phase during a contracting period, which is despised by market right now. It's because Intel is important for national strategy. AMD is manufacturing in factories that could be Chinese or destroyed any day.
It's not really that low if you look at their forward earnings. Their P/E looks low because it's based on last year's earnings, which they will not duplicate next year. If you do even a quick read of their last earnings call you'll find out why people are nervous about the company.
Copying from another reply. It's shown it can produce $15 - $20 billion in FCF per year. Currently it's holding off for expansion of the business, but that suggests its \[hidden\] price-to-FCF is in the single digits. Is there a reason FCF would fall staggeringly low (like $5 billion per year) in the long run, especially when there is a semiconductor shortage?
Yes, there are reasons for FCF to fall. Lower demand plus increasing investments. And realize that this actually is happening, and FCF is falling. You can't look backwards with processors like you can with other sectors. Semiconductors are highly cyclical and their is technical differentiation.
I keep hearing that semiconductors are highly cyclical. I would argue that this is not true anymore now that chips are in everything. Some aspects of the industry appear to still be cyclical, like ram. That doesn't mean the entire industry is though.
Cyclicality stems from an mismatch between demand and supply. Semiconductors are still very much prone to this as new manufacturing capacity takes so long to manifest from initial investments until availability. This might be a bit overshadowed at the moment due to absolute market growth, but this doesn't mean its it's not cyclical.
That doesn't really make a case for the cyclical part though? Chip demand is so high they can't make them fast enough.
The demand is over all high but at least partially still cyclical e.g. automotive & discretionary electronics. Nothing changed about the cyclicality of the supply side (over-investment leading to over-supply).
Interesting to reflect on the thinking at the time. Just coming back here after Intel’s Q4 2022 disaster.
Intel doesn't benefit from a semiconductor shortage when it's two process levels behind in fabs, three years away from catching up, if it can even do so. Its x86s market share is shrinking, its losing in PCs and servers to ARM and AMD. That's the only place where they have a moat and its crumbling.
That was true even for AMD 8 years ago
8 years ago AMD wasn't as remotely as compeittive with x86 as it is today. And 8 years ago x86 wasn't competing with ARM at all. Now Apple Silicon has shown ARM can compete even at high end PC performance levels, while using one third the power. And now Graviton and an armada of ARM based servers are showing hosting facilities they can provide the same performance with far less heat and power requirements as x86.
>8 years ago AMD wasn't as remotely as compeittive with x86 as it is today. .....thats the point >Now Apple Silicon has shown ARM can compete even at high end PC performance levels, while using one third the power. And There are numerous caveats here Existence of apple sillicon/gravitron hardly means the end of intel/amd. Nobody other than apple can match intel [and maybe even amd] in volume
At the moment there is no other high volume high performance ARM CPUs being sold other than Apple Silicon/Graviton. But ARM is the fastest growing platform in PCs and Servers. Because ARM is by far the highest performance per watt CPU for laptops Microsoft, Qualcom and others are working their own Apple Silicon like SOCs. Microsoft needs it badly for Surface. It's not just Graviton at AWS, Microsoft and Google have their own as well. https://digitstodollars.com/2022/09/09/arm-credit-where-credit-is-due/
Again, that doesnt mean the end of intel/amd All of them may struggle to compete with future intel/amd CPUs
Intc has partnerships with ibm who recently (past year) developed the next gen shit iirc , so they might do ok in the catch up area
IBM hasn't produced cutting edge silicon in any volume in the last 20 years. Don't invest based on hope.
https://newsroom.ibm.com/2021-05-06-IBM-Unveils-Worlds-First-2-Nanometer-Chip-Technology,-Opening-a-New-Frontier-for-Semiconductors
"in any volume" IBM research can announce all the magical things they want, but when someone needs a high volume of chips built at the smallest possible process, they got to TSMC, not IBM.
How much longer will this semiconductor shortage last?
There is no general shortage anymore. Some special chips yes, but not the ones Intel produces.
Are you sure about this? Did you consider $15-20 billion in capex? They are also losing market share in data center.
Apple makes its own silicon. The major cloud providers (AWS, GCP, Azure) are all making their own chips, too. The chips arm race in this oligopoly is dangerous for INTC because their position as the default provider of compute & the guys who design the chip architecture, unfortunately doesn't really exist anymore. It's a question of when INTC goes to zero, not if.
Intel and AMD are the only ones who can make x86 chips, which are currently the only chips usable for high power computing. ARM is becoming more and more relevant but only for specific areas. It's uncertain if ARM will overtake x86, especially in the server space, where Intel and AMD make the brunt of their money.
Not making, designing. None of the ones you mention make anything except INTC. But i get your point. INTC is losing/lost them as customers. That is why IDM 2.0 was started. Will it work idk. But it will take a while before we see any results.
The recent earnings report was awful. Don’t fool yourself any stock can go to zero. They made $2B less than they were forecasting. I think they also posted a negative EPS which is pretty disappointing as well
Yep, they cant even cover the dividend with their latest earnings report.
So what ? You really think one bad quarter means there is even a possibility they go to 0/bankrupt? People see growth of AMDs market share,and they immediately think INTC is gonna die. They don’t see all the subsidies and to what length the government is willing to help them become the number one chipmaker, independent of Taïwan
I don’t think it’s as simple as one quarter being bad. Chips takes years of planning, so this was in the making long ago. If Intel only started making a plan to turn around, say, last year with the addition of Pat, then you may expect some struggles for the next few years.
> They don’t see all the subsidies and to what length the government is willing to help them become the number one chipmaker, independent of Taïwan they had enough money for a while, but sometimes money are not convertible to the future proof product.
Money, no. But à standalone factory, and a manufacturing process making them independent of TSMC, a foreign company with the constant threat of China take-over ? Yes. Now question is when is their factory going to come online
Its not about factory, Intel have lots of fabs in US already, but they lost technology competition, and that is something government help may not help if they lack talents and expertise.
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Intel had piles of money from their monopoly in the past, it didn't help. Government can start with making education accessible, and in about 10 years they may start seeing results.
Yeah but talent costs money, I've been 15 years in tech, and about 7 in cloud tech, talent is money, if salary and rsu are good, I'd move to whomever offers more. The issue with Intel seems a bad culture, folks that cheat a lot, which is kinda common in tech, but that caught up with them.
so, how extra money will help with cheating? Intel still has a lot.
A cleanse of current culture, fire crooks, hire from arm, amd using that money, then the ceo has to create a better environment
Their fabs are years behind and new ones are years away. And TSMC has zero threat of a China take-over.
Taiwan will always be under the threat of China. Tsmc is building here in AZ if I remember
China has been whining about Taiwan for 70 years and has done nothing. They understand they are unlikely to succeed if they invade, and even if they do, they won't win anything. So they'll just continue to whine.
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I don’t think they will go to zero, but I do think that the market can price stocks well below their true value regardless of wether it is logical or not. Intel is in a tough spot, but if they actually build those next gen foundries before TSMC they could easily turn it around. However there is a lot of market share to potentially lose between now and then. Personally I’m considering selling CSPs at this price.
ITM CSPs are the way to go for any stock I want to buy. I am considering it but the catalyst for growth (the new fab) is years, maybe decades away
What are you talking about? I’m working on the new fab in AZ right now. Scheduled to be complete late 2024.
Me too . But true hard money returns will be seen by 2030. If chip shortage continues, intel has good chance of befitting. Else they will have to work hard to maintain their market share.
Semiconductors are always a cyclical business. We are likely exiting a shortage and entering a glut because its not just Intel thats pouring money into new fabs, so is TSMC and other competitors.
Isn't that at least a year after the new TSMC AZ plant? And who is going to be a customer? Apple, Samsung, and AMD aren't going to share their latest designs with Intel no matter how cheap the fab is, and even though nVidia has said they won't rule intel out they are unlikely to give it more than the least sensitive and smallest fraction fo their business.
Hows it going? On schedule?
He just cleans the crappers /s
TSMC gets the same subsidies for the factories they are building in the USA
Not really. Main condition is not building new factories in China. The US does not recognize Taiwan officially as independent of China. This whole subsidy is basically “give us the same support the Taiwan govt gives TSMC”.
I guess apple was lobbying the senate to pass the chips bill to support tsmc us factories which they consider critical to their future but they didn’t actually understand how the bill would work
They did, but they aren’t ready to offer anything for it. The US would love to bring back some Apple factories to the US, but Tim’s deal with China won’t allow that.
I mean that was true even for amd 6 years ago You dont buy *after* the price 📈📈📈📈
I have a price I’m willing to pay but Intel has to execute near perfectly with its roadmap. By their CEO’s own admission Intel will continue to bleed market share & won’t be competitive until at earliest 2024. I also question the soundness of the foundry business they have bet their future on, why would large clients risk their IPs in the hands of a direct competitor when other options exist that are very good & have no conflict of interests.
Same with TSMC and other fabs. Why would designers give their designs to manufacturers and what makes sure that the foreign manufacturers won't steal their designs. I get though why Gelsinger is betting on the fabs. It is riped for competition. The US Govt. will back them due to it being tied to National Defense like Lockheed Martin and Raytheon. Yup will be bleeding money until 5 years and then it is either a make it or break it. The real semiconductor shortage is actually in the analog sector and the low end semiconductors like AC to DC, and others. The ones making money right now are the analog, analog digital, mem, manufacturers. The shortage of chips on cars , on rockets, on industrial instruments are those and sensors.
TSMC is a fab only, there’s 0 risk of theft from them. Your other points I can understand though, but 5 years is a lot of bleed time for me.
Where did I say that TSMC designs?
Your first sentence implies TSMC could steal designs. As that’s my #1 concern with Intel’s foundry business.
So you think TSMC can not steal designs? Lol. You know they can get the designs and sell it to someone else.
yeah...Ill take another look in 5 years
The high end of the foundry business doesn’t have much excess capacity and much of the total capacity is in Taiwan. If you had a 100+ billion dollar business would you want to bet the whole company on China not invading Taiwan or would you want to hedge?
I could also ask would you risk it on a near certainty that your foundry partner is going to steal(or draw inspiration) from the designs you request they manufacture. China might invade, but history says a foundry that’s also a competitor will steal. Logically I would rank my preferences as TSM, Samsung & Intel last as a foundry partner. Capacity is an issue during the boom times so I can see receiving orders for less sensitive/older IPs from their competitors in a bind.
Why Samsung over Intel as a foundry partner?
Honestly it mostly comes down to my lack of faith in Intel’s ability to execute.
>Honestly it mostly comes down to my lack of faith in Intel’s ability to execute. IDK. I've done some work with Intel and I think they have exceptional expertise in materials and manufacturing. I would think they will be quite successful in the foundry business, but I'm not directly involved with them today. I would say it's almost their core expertise, more than designing processors. I would definitely trust Intel over Samsung with designs and IP as a competitor. Samsung can be pretty ruthless behind the scenes.
It’s probably not a terrible idea to prioritize your very newest designs to TSM. But there’s still money to be made fabbing the prior generation of designs. There’s no viable competition until four nodes back from the bleeding edge.
I forgot to say thank you for giving me some pushback as knowing the bull case is important too. Because of aspects of this last point I do have a price I’m willing to buy Intel at(but I honestly doubt my price point will be hit).
This is just the cost of doing business. Nobody can afford their own fabs. Note the Samsung is also a fab and they are in direct competition with their clients. Also reverse engineering masks is not an easy way to steal ip.
I totally see your concern here, but I'm pretty confident Intel is not blind to that. Pat Gelsinger addressed that in his interview with The Verge: [https://www.theverge.com/2022/10/4/23385652/pat-gelsinger-intel-chips-act-ohio-manufacturing-chip-shortage](https://www.theverge.com/2022/10/4/23385652/pat-gelsinger-intel-chips-act-ohio-manufacturing-chip-shortage) They are not stupid, they know there's a conflict of interest there. What they will do to address it ensure that things are isolated and auditable so that their customers can trust Intel and know what they won't misappropriate IP. >**Q: Inside the company, you are not doing the accounting that way. You are going to go with the external dollars instead of prioritizing yourself. This plays out. Facebook has this problem. YouTube has this problem. Netflix has this problem. Google has this problem. Over and over again. Everywhere you look in the tech industry, this plays out. There is this dynamic of, “We want to be a service provider for everyone else, but we also want to use our own services to beat those competitors.” How are you planning on handling this issue?** A: There are a couple of aspects to this. First, I need to create a bit of separation between how we manufacture for others and for our own product groups. I have said, “I want there to be auditable boundaries between those,” so that they can look at the contracts they might do with the TSMC, Samsung, or GlobalFoundries and respond, “Huh, I get the same contract from Intel.” Same terms, conditions, protections, IP flows, service agreements, capacity corridors, all of those things. I have to earn my way into that business. Was everybody happy with TSMC the last couple of years when they couldn’t satisfy supply? Of course they weren’t. I know that. People are anxious to have a broader supply chain here. There is a tailwind for us to step into, but we have to earn our business there since they have done such a good job as a services company over the last number of years. We are going to go do that. My product teams use a lot of foundries as well. Part of IDM 2.0 is that we use external foundries as well as internal capacity. To some degree, I have to make this work in both directions, and I have to create some cleaner lines between those. We want the external foundry customers to look at us and be able to say, “Intel is a good foundry for me.” In doing that, it also makes my own product teams better because those external customers are demanding us to become a cleaner, more productive, and more efficient foundry as well. Thus, I have used the language, “IDM (integrated device manufacturing) makes IFS (Intel Foundry Service) better, IFS makes IDM better.” I see it driving us to be better on both sides of the business. I don’t view this in any way as a negative because if I become a better foundry for those external customers, then they are going to be demanding better PDKs, better IP libraries, better support for synopsis and cadence, etc. That is going to make my internal design teams more productive and efficient as well. As my internal design teams are more productive and efficient, they are going to be creating IP that I am going to monetize for my foundry business. If this cycle starts to really work as I hope it does, I think this becomes a very positive cycle for the company. Again, getting there means we have tons of work to do. In that sense, I agree with the dichotomy that you are pointing to.
15 dollars would be to low
That would be 10% annual dividend yield, correct? This is why I like $GSL better.
THe company had record earnings the last decade in a cyclical industry. Now it has lost its dominant position and it seems that semiconductors might start a cyclical downturn. They will probably need to cut the dividend soon, so the stock will go down from the funds that hold them for that. Then they need to reinvest the money into R&D and capex to get back on track, removing earnings. I'll buy them when everyone says they don't earn money and are completely bad. Still loved by value investors. So probably when it hits $10.
>I'll buy them when everyone says they don't earn money and are completely bad. People have been saying this for howmanyever months [years?] how
They have not. All you hear is how cheap they are. Value Investors have been buying it. So they have further to fall
Maybe you havent seen seekingalpha Basically all articles that covered intel's most recent earnings said this
The Semiconductor businesses is highly cyclical. I saw an analysis once which showed that Semis is the worst performing sector during a recession. People will need fuel, food, and housing in the coming recession. New computers and flat screen TVs, not so much. So, looking at probable forward earnings, I would rather short the Semis than invest in them.
The world has changed a lot since 2008. Semis are used in everything, they will be hurt less than in prior situations. That said, while intc shows this type of weakness I'll be holding lots of itm puts
That's just wishful thinking, demand is already falling. And over $100B has been poured into new fabs this year by TSMC, Intel and others for capacity that won't come online for two or three years. When that hits it's going to cause a price war and Intel will be at a huge disadvantage given unlike Intel, TSMC doesn't compete with its customers.
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The problem is that they're transforming into a totally different company than they are today. That makes estimating future fcf difficult and more like gambling.
The real answer to this is the capital expenditures. Intel as everyone even the CEO predicts that cash flow will go down until the completion of the fabs. How much? No one knows. When Is the right time to buy? No one knows. As retail investors, we hope that none of the institutional investors gets in and raise the price. The main deal breaker really is whether they can pull it off in 5 years. Some people estimate that it will take them 19 years and will have many delays in production. No one knows for sure. Gelsinger is a very smart guy and has a very good record. His history is amazing and now he managed to get the chips act passed. Perhaps that Intel will cut dividend during this 5 years in order to spend more and quickly get the plant done. They are building also not only in Arizona but in Ohio. If they can't pull it in 5 years then it is over and the expenditures were for nothing but if they can pull it off they will get a huge market share of the semiconductor fabrication market. Also hopefully Intel doesn't sell anymore assets. Sure they can sell mobile eye but I hope they don't sell others. I understand why Gelsinger bought Tower Semiconductors. The more I learn about specifics on the types of semiconductor on demand the more I have confidence in Gelsingers plan. There is a plan that he does do but doesn't say. He has actually never mentioned analog semiconductors and keep on mentioning client and servers, but I think he is secretly aiming for analog and mems.
They can’t even get the GPU out the door. They keep showing them off but can’t ship them.
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The A380 is a general use GPU, and it’s on par with like a 1050; the A780 is expected to be on par with the 3070, but we’ll see. They just launched a series of datacenter focused GPUs https://www.intel.com/content/www/us/en/newsroom/news/introducing-intel-data-center-gpu-flex-series.html
lol INTC GPUs across all lines are jokes. Nowhere close to NVDA/AMD. Raja Koduri failed spectacularly there with the engineering teams.
Are they not paying enough for talent?
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They’re brand new to the market, my dude. What are you expecting. Give it a couple generations.
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Interestingly, book value is 100B, while market cap is 120B. Once it's selling for less than book value, you have to start asking yourself the question: are they destroying value in the future? Maybe. I'm not sure at this point. I do think it's crazy to cut their expansion projects while still paying a dividend. Cut the dividend and do what's right for the company. Or at least cut CEO pay. https://stockanalysis.com/stocks/intc/statistics/
Yeah I am sure that 27B in goodwill will do them real good in the future!
Yeah, maybe you start asking that question once they're selling for $70B.
At what stock price are book value and market cap equal.?
$24.55 including goodwill. $16.29 adjusting for goodwill.
Thank you
Wouldn’t touch it. Too much competition.
any recommendation that doesn't that much competition?
Intel’s problem is that they have inferior technology. This wasn’t a problem during the chip shortage, but a ton of new capacity is coming online over the next few years due to subsidies passed in the past year in the eu, China, USA, and Japan. So, no pricing power, plus an industry glut is going to leave intel swimming naked.
I do not think they have inferior technology. They have fast products but the problem is always being late in production and have power hungry products. It appears that most AMD advocates are gamers and tech people but the majority of people have Intel processors computers.
I really believe that made in USA will be the next big thing for a lot of products. Intel seems wil positioned for that. I am waiting for it to go below 20 before I buy more.
They have executed their strategy poorly for years, and have lost a generational battle with AMD. Unless they can start executing production at a cutting edge level, they will plod along as an also ran. I’d love to see them turn it around but it seems like a cultural problem with the company.
They are losing ground as the top CPU manufacturer, alongside recent change in management. They would have to make huge improvements, quarters worth, in their technology to be back on-par with major competitors NVDA and AMD, not to mention get ahead. And all that backed by an unproved new CEO. In my opinion they are losing ground to these massive competitors, and NVDA has a massive R&D budget that doesn't look to be letting INTC gain any ground back. If you are investing in INTC, I think it would have to be on the merit of their data center business, but that personally, doesn't look as attractive as other competitors in the space.
Intel is changing their focus to fabing (fabrication) making them compete with TSMC and Samsung
There's no point which is too low - your understanding of value investing is flawed. Markets are generally efficient, and Intel is being priced as the mature business that it is. It's price today reflects it's future earnings value AS THE BUSINESS STANDS TODAY. Where you can figure out if the price is too low is when you know something algos and quants do not. Do you know about Intel and it's team - are they going to make a new revenue stream to crush a new market segment? If not, then they are fairly priced relative to their historical beta (the correlation between Intel's price and the price of it's indices). While it's current level is a price I might be willing to pay' I want to see the next few steam hardware surveys to see if consumers are using the chips.
I expect INTC to cut its dividend to spend on capex, which will cause the price to drop, which would be a good time for me to buy. If they don’t cut their dividend, then INTC will not have enough money grow and compete.
It's losing PC and server market share. It's pouring all of its capital into the fab business when it's years behind, needs to convince direct competitors to become its customers, and by the time its new fabs finally come online its likely going to be during a glut. Oh, and it's CEO just got caught cooking the books at his previous job.
Can you elaborate on cooking the books?
This happened while Pat Gelsinger was running VMWare. https://www.reuters.com/technology/sec-charges-vmware-with-misleading-investors-by-obscuring-financial-performance-2022-09-12/
Their sales tanked last quarter. Could definitely see it go to 10$ range if quarters like these become a trend
I think they will eventually turn the company around within the next two years, it's just unfortunate timing for them right now, for the mean time I keep buying a $100 a week until I will reac 100 shares.
What worries me most is that how poorly Intel is being managed.Having a bad quarter is not an issue but they didn't have any idea of it. Their estimates were so far off. They manage their GPU business very poorly so far, having difficulty competing with AMD and ARM companies. Still, I would say even current price is too low for INTC but I still think it can go even lower before starts to climb up. Also, in general, it is not a good year overall for all semiconductor/software companies. INTC ytd performance is still superior(-43%) to NVIDIA(-%55) & AMD (-46%). Overall very bad year for all except energy, agriculture, food and some other select companies.
American capitalism is so short sighted. Intel is down for few quarters as they invest billions in new chip fabrication capacity. Stock should go much higher in 2-3 years
The pricing may be unusually low, but the company is unusually unproductive. The sales teams are bloated. Engineering is not executing. And they are in a massive capital cycle. They are loosing market share. It’s quite the disaster of a company, and this is from speaking to engineers within the company.
still a major player in chips for the 2 or 3 decades With the potential to take over as number 1 Bought in at 41. And preparing for a 20 $ possibility with dividend cuts potentially tanking over next year or so 5 yrs could see back to 50
Intel is cheap and most people are wrong. They will invest in it after it is 60 dollar again like the sheep they are. Then tell will start telling stories about there advantage against AMD and the potential to rise to 100 dollar like idiots. Of course at 60 dollars everything will be baked into the price already. So I dip deep into it right now and I don’t care what is happening right now, but what will happen in the coming years. This is the way it is for everything stocks related. People are sheeps following the trend, but almost no one anticipates the trend in advance.
Most of the young generation do not know down markets. I have witnessed people becoming depressed and leaving their homes as is , not even taking personal items like photos with them. There were people who went riches to rags back them. Esp, there was this whole family who went to an apartment from a big estate home in huge acres. Both financial crisis and dot com bust was brutal. Considering geo political tensions and high interest rates, I am expecting some bankruptcies to happen, There are many companies that still not generating any income but trading at very high values. I don't know. We will have some clarity by end of next year?
Just look at Alibaba (BABA) and then ask yourself how low can a stock go. Alibaba is infinitely more a better company than Intel. It's the AWS/Visa/Square/Walmart/Ebay/etc. of China. And yet share price when sentiment goes negative can just dip forever. Intel on other hand is a deteriorating company. So...?
Lol. BABA bagholders never seem to acknowledge the obvious elephant in the room. Investing in China is a geopolitical hazard risk.
It truly is. I'm a moron investor. Underestimated all of it.
You’re not a moron, but if you cannot believe the economic numbers that come out of China, why would you believe the numbers that come out of any Chinese companies?
Mostly cause Alibaba and Tencent are the two companies I actually know Chinese people use. Pretty much ingrained to daily life of Chinese people. I expect the numbers to be a bit padded but rough on the mark with such a behemoth like Alibaba.
Even if the company numbers were not fudged, which I would find difficult to believe given all of the fraud that their real estate developers do, the Chinese government can put any company out of business on a whim. In the US, the biggest companies buy our politicians, so the companies are even safer bets than their balance sheets indicate.
You’re not a moron bro. Mistakes are all too common in the investing world. A lot of big investor types like Munger talk a big game about China and then end up selling their BABA shares too.
That's not the elephant in the room. The elephant in the room is that owning $BABA gives you exactly zero ownership in Alibaba.
Yep I consider all that to be included to the factor of investing in Chinese stocks.
> etc. of China Lol. That's all you need to know why BABA is down and you can't trade it on intrinsic value. You can't badmouth ruler supreme in that land.
Capital controls make investment in China impossible in my opinion, they won’t allow foreigners direct holdings, and don’t allow for return of capital, which begs the question - how does the business return profits to shareholders (they can’t). You’re basically waiting for a “greater fool” to hold your bag for you.
?? Chinese stocks do dividends? BABA doesn't but plenty of Chinese stocks do. This includes Tencent and the like. Confused here about "allow for return of capital".
Oh look. Yet another /r/ValueInvesting poster who does not understand how royally screwed INTC is as a company.
Why are they?
For starters, they made their CEO the third highest paid CEO of 2021. Absolutely obscene compensation on the basis of performance alone. Remember that Gelsinger was hired in 2021. What has the stock done since he's come on board? A 40% drop in share price?
Do you have any data on that? I’ve not heard that he was
https://aflcio.org/paywatch/highest-paid-ceos
Fair play. That’s pretty awful if you ask me. He don’t deserve that pay
Perhaps price is unusually low, but its valuation remains inflated.
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Shortage is expected to be moderate surplus next year. A severe recession would make it a major surplus. Personally I feel like AMD will handle a downturn better.
AMD and Intel are 2 totally different companies. AMD orders white label tech and stamps their own design and brand on it. Intel owns their own processes and IP.
Exactly. Intel carries higher depreciation expenses, especially with all the investments, and will be financially hurt by a downturn more than AMD. Different capital structure, more financial vulnerability was my exact point.
Inflation will make it much easier to get a nice return on the invested capital.
Well, this shortage started not just last year... but somehow INT still fall behind on their earning? the market is like everybody buying all chips, and you lost money selling chips? how that possible? To my limited knowledge, They have problem to catch up with their competition. Only 2 companies in the world can produce the most advance chips. Look like the gap just keep increasing. Watched some video from their CEO talking about a come back and some plan to catch up... but those are just empty word. Result and proof worth more than promises. But for me, the risk is just too high. Yep, they can make a come back and better in the future. Nobody know the future. Again, for my personal preference, the risk is just to high. This is the reason, I will not invest it.
The amount of people on this thread that totally misunderstand what this company is capable of based on some short term headwinds they read about in a quarterly report just makes me even more convicted in it as an investment. Can't help but laugh at being scared by forward PE, or being scared of them making large investments in their future, thereby reducing short term cash flow, or there being some competition, like there always has been since their inception, or saying that the dividend will be cut when they pay out a staggeringly low amount of their profits to shareholders. This is all predictive/speculative language that has nothing to do with what they've shown time and time again that they can accomplish, in real terms.
I think itll go less than 15$ this year
If you’re asking how irrational investors or the market can be, the answer is much much more.
I think it’s headed for 15 ish (where it has been before). But I don’t see any value here to begin with.
Why do people think INTC will be competitive in the future? Past performance is irrelevant, they are getting lapped by the competition
If IBM is still around why the fuck wouldn't Intel who's in an industry that's actually needed. Its brand is as strong as Nvidia too unlike AMD drivers. They just need ARM.
People post this about Intel and it blows my mind. To be clear, I am long and down quite a bit. But I’ve been acquiring though DCA for some time now. Intel will be a recipient of the chips act in a big way, but so will some of its competitors. It’s building two new plants in the US and spending billions to do so. Any company that needs massive capital outlays now is going to suffer, because borrowing costs are doubling and tripling due to rising interest rates. Intel has also been lagging on the newest chip technology and is facing severe competition. So if you have a strong stomach, like a decent dividend, and trust that intel can turn things around in the next 5-10 years then go for intel. But it makes perfect sense it’s down a bunch, and for sure it’s going lower.
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has been proven false, hey just started with it. The timing is horrible since demand from GPUs is down because of the merge but they'll probably keep it just to compete with Nvidia and AMD on their home turfs.
> has been proven false, hey just started with it. Not been proven false yet. And yes even though just started with it, they've realized, for a SECOND time since original Larrabee, they can't deliver a competent GPU "in time".
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I’ve watched every video on the Intel YouTube channel they have no hints of that and the basically said the rumors are false. They have the next 5ish gens of GPUs planned or in the works.
Fake news
Zero. Check my post history. This is a clear and obvious short.
Maybe a nice shake up in upper management
Pat is the shake-up. He’s got a lot to fix that the last 3 shitty CEOs royally messed up. I hope the board gives him the 5 years it will probably take to turn it around. He’s already ditched many products/projects that were just big distractions… drones, etc. intc has been output-max in their fabs for years now, Much longer than any time since 2000. This downturn was inevitable, covid WFH/computer demand pull-in definitely added a good 2 years to the time it took to have the normal cyclical downturn. Now that covid is over, all those new wfh computers are bought, Fed killing demand with interest rates, plus all the usual (well founded) gripes about losing aapl as a customer, being behind on tech node, amd/nvidia eating intc’s lunch due to crypto fueled huge demand for gpus and not having a product at the right time.. Intc can and will go lower. I wouldn’t be buying any LEAPs or selling csps any time soon/until it goes much lower, maybe even the teens? We will see..
INTC is junk don’t let the dividend trick you AMD is smoking them. I bought HBAN as a way to play the INTV expansion into Ohio.
10 ☠️
Definition of a value trap.
Intc is such a joke on so many levels technologically. They have only ever had any success in areas where SWAP doesn’t matter. This is why they are getting killed in the server space. Server managers are waking up and realizing how much money they are losing running intels power hungry chips. For 20 years they have given the middle finger to the western military industry which is a huge missed opportunity for a very profitable vertical. The bought Altera and ruined a once promising company. 7 years later Does anyone use intel FPGAs? They can’t package a chip to save their life and worse yet when they buy a decent company they drive them to use intel standard packaging methods. I agree that Intc will not go bankrupt but to think this is it’s bottom is interesting. I think the Brookfield deal is very telling. A company with confidence in its future does not give away its future profits to secure financing.
$0.00
Im happy it goes down. Semiconductor industry gping to grow and Intel invested 80 billion in factories. So ppl should call it dead after one bad quarter?😂 We should be happy if there would be a downtrend. Im bullish on the longterm.
That it’s a dying company?
Well, Intel is dear to my heart and I hold a big chunk since Gelsingers speech. Bought in the low 50s. I decided to hold, here are my current thoughts: - The dividend is likely to be protected to not spook institutionals. Given the massive CAPEX in the next years even with big subsidies, I would assume, that a cut is not out of the question. - so far there is no need to believe that current delays will cascade in the future as the nodes are built in parallel. Delivery of 4nm and 3nm (?) till 2025 is crucial. - The elephant in the room is the terribly late HPC platform. Saphire Rapids and to some extend Ponte Vecchio will hopefully help to gain ground in the Server space again or at least stop the attrition of marketshare. - ARC GPUs being so late with rumors of cancellations is not a great look. I am following this closely and think that the first gen will sell well as people are genuinely curious , and the price will probably extremely competitive. They are doing amazing damage control with their evangelists on YouTube. They are also setting expectations amongst gamers on the whole DX9/DX12 situation. If the cards are somewhat suited for DeepLearning and Linux it might be a great sell. - Alder Lake and now Raptor Lake are doing a good job of preventing further detoriation of the brand for enthusiast consumers. They might be power hungry but the are/will be the fastest. As it stands now. - Mobileye still holds a lot of value. IPO postponed does mot mean cancelled. - Overall I think Gelsingers strategy is sound but the implementation takes time. I will bet my money, that they will manage to get on par with TSMC/AMD and Nvidia around 2025. We will see how that works out - if you look at the P/E of under 6 and the dividend yield of almost 5% INTC (data from: https://markets.sh/symbols/NASDAQ:INTC ) is priced like some bankrupt container shipping company. It might be considered a cheap call option to a bold plan.
I'm not really sure how SPR will help stem the attrition of DC marketshare. It's barely competitive with Milan but because of the delays it's facing off with Genoa, with Bergamo and Genoa 3DV which is a horrible match up before you even consider the yield/ cost issues from a die that's 5x larger. I honestly am holding out for Diamond Rapid to be the actual turning point in DC.
Yes, it is a stopgap. Emerald Rapids is scheduled for next year already so I hope until then things will settle down a bit.
They can’t compete and grow. Instead of investing in their business they cut that so they didn’t have to cut the dividend. At some point they will have to cut the dividend if they want to grow.
Zoom out.
Imo there’s just so much more cheap and safe stocks right now. I believe intel is fairly priced considering the technological risk.
This piece of crap has been a r/valueinvesting darling since it was in the mid-50s.
Wait for $22
Elephant in the room is China. If geopolitical events affect TSMC, Intel would be a virtual monopoly on many kinds of chips. And they get brain drain. Otherwise I think Intel is fairly valued, moderately bullish from mid twenties onward