What’s Going On Here?Intel unveiled a whole new strategy and a $20 billion investment plan late on Tuesday, which it’s confident will help it regain the coveted title of world’s biggest chipmaker. What Does This Mean?Intel’s gone a little off track in the last few years: its manufacturing has slipped behind schedule, it’s lost its grip on the market, and some unimpressed investors even started pushing the company to sell off its chip production altogether to focus on designing them.
Now, though, it’s back with a new CEO and a new grand plan. Intel hasn’t just not ditched manufacturing, it’s actually doubled down on it: the company announced it’ll be investing $20 billion in two new factories, and launching a new unit that makes chips for other companies too. As for those pesky manufacturing delays, it’ll outsource what it needs to in order to stay competitive, but it still thinks it can manage the lion’s share itself. Why Should I Care?For markets: Intel’s gain might be TSMC’s pain.
Rival TSMC’s neck might be sore from whiplash: one moment the world’s biggest contract chip manufacturer thinks it’s about to pick up business from Intel, and the next it’s facing even stiffer competition from the American chipmaker – especially now Intel’s making chips for other companies. Still, that sore neck should go well with its sore tush: TSMC’s shares dropped 3% when investors heard the news.
The bigger picture: The real winners are upstream.
There’s a global shortage of chips right now, which Intel reckons could last for the next couple of years. That could spell bad news for carmakers that have had to halt operations until they’re all chipped up – a delay that could lose the auto industry $61 billion in sales this year. Still, at least those that build chipmaking equipment are bound to have good days ahead, which might be why shares of chip-quipment supplier ASML jumped 6% after Intel’s announcement. | 