Whatâs Going On Here?Intel unveiled a whole new strategy and a $20 billion investment plan late on Tuesday, which itâs confident will help it regain the coveted title of worldâs biggest chipmaker. What Does This Mean?Intelâs gone a little off track in the last few years: its manufacturing has slipped behind schedule, itâs 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, itâs back with a new CEO and a new grand plan. Intel hasnât just not ditched manufacturing, itâs actually doubled down on it: the company announced itâll 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, itâll outsource what it needs to in order to stay competitive, but it still thinks it can manage the lionâs share itself. Why Should I Care?For markets: Intelâs gain might be TSMCâs pain.
Rival TSMCâs neck might be sore from whiplash: one moment the worldâs biggest contract chip manufacturer thinks itâs about to pick up business from Intel, and the next itâs facing even stiffer competition from the American chipmaker â especially now Intelâs making chips for other companies. Still, that sore neck should go well with its sore tush: TSMCâs shares dropped 3% when investors heard the news.
The bigger picture: The real winners are upstream.
Thereâs 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 theyâre all chipped up â 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 Intelâs announcement. | 