Intel share price: Semiconductor giant to expand foundry business

Written by: Farquar McIntosh
October 21, 2019, Friday, November 22: Intel Corp (NASDAQ:INTC), the world’s biggest semiconductor manufacturer, is planning to expand its contract manufacturing business in search of fresh revenue sources amid continuing decline in its core business. The move marks a shift from the company’s traditional approach of using its advanced production capabilities solely for making its own chips.

Speaking at Intel’s annual investor meeting in Santa Clara, California, Chief Executive Officer Brian Krzanich outlined a strategy designed to get the company back on track, which includes releasing new, faster chips for mobile devices next year.
In yesterday’s trading, Intel shares closed 2.73 percent higher at $25.23.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.

**Opening foundry**
At his first annual investor meeting since taking over the US semiconductor powerhouse in May, Krzanich said that the company is opening its manufacturing facilities to other chipmakers.
“If we can utilize our silicon to provide the best computing, we’ll do that,” Krzanich said. “People who can use our leading edge and build computing capabilities that are better than anyone else’s, those are good candidates for our foundry service.”

The move shows Krzanich’s willingness to open Intel’s factories to a wide range of companies, including potential competitors, as he sees an opportunity to fill idle lines and find a new source of revenue. This is something that his predecessor Paul Otellini did not allow to happen.
Reuters quoted Raymond James analyst Hans Mosesmann, who wrote in a note to clients: “It’s very refreshing to see Intel make this move and could have important implications for the industry.”

Mosesmann added that the move could see the Santa Clara-based semiconductor giant, manufacture chips on the behalf of competitors such as GPU maker Nvidia Corp (NASDAQ:NVDA) or even Qualcomm Inc (NASDAQ:QCOM), the dominant maker of chips for mobile devices.
Intel will also push hard to increase its presence in mobile, where the company is well behind the leading players such as the aforementioned Qualcomm and South Korea’s Samsung Electronics Co (KRX:005930). Hermann Eul, Vice President of Intel and head of the company’s mobile division, said that the chipmaker will focus on developing parts for a smaller number of handset makers with large sales volumes. The company will release new 64-bit processors from its Atom line, with the new line-up comprising a low-end model codenamed SoFIA and a high-end chip dubbed Broxton. SoFIA will launch next year, while Broxton will likely appear in smartphones and tablets from 2015.

The company’s goal is for a 15 fold increase in mobile chip graphics performance by 2016.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Intel expects revenue in 2014 to be flat next year, with lower sales in its core PC business offsetting an increase in servers. PC shipments are in decline globally as customers favour tablets. But Intel expects the rate of the decline to slow as it sees signs of stabilisation in the market.
“Our view is that [the market is] declining but it’s beginning to show signs of stabilization,” Krzanich said.

**As of yesterday’s US close buy Intel shares at $25.23**
**As of yesterday’s US close sell Intel shares at $25.23**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.