What Does The Future Hold For Intel? – ‘A Rocky Start To The Summer’
The semiconductor market has been dominated by Intel for years; a company renowned for manufacturing super-advanced chips. The corporation’s current net worth stands at over $200 billion. However, with strong competition and upcoming expansions in the industry, the firm may struggle to uphold its pioneering legacy for the future.
In June 2020, Apple’s WWDC20 revealed that new MacBooks would be abandoning the Intel processor for an in-house-designed model- the Apple Silicon. This transition ends a 15-year $3.4billion of its sales revenue. The move gained political attention as Americans expressed concern over the extent to which the US can uphold its dominant position in chipmaking. The CHIPS for America Act, introduced to Congress in June 2020, aims to secure funding for the expansion of semiconductor manufacturing, within the country.
Despite serious reactions, Richard Waters, a Silicon Valley commentator, believes that other PC manufacturers are “unlikely to follow suit, given the weight of the software tied to the existing technology”. Moreover, the extensive and expensive technology required in chip development, suggests that Apple’s steps will not be retraced.
Further troubles were seen in July 2020, when Intel announced a delay in the development process of its new 7-nanometre chip. The US giant also put forward the prospect of moving away from some individual production and relying on other manufacturers, to a greater extent. The company’s shares reacted by dropping 17% the following day.
Jim Lebenthal, a Chief Equity Strategist at Cerity Partners, called Intel out for “operational issues” and announced he would be selling his shares in the company. An even tougher perspective was provided by Stacy Rasgon, a Bernstein analyst, who pronounced the Intel stock as “basically un-ownable”.
Subsequently, shares of Samsung Electronics, one of the only chipmakers that can live up to Intel’s advanced technology, rose by 5.8%. Although not in direct competition, TSMC, an Asian semiconductor foundry, also responded positively to the announcement as Intel could shape up to be its next big client. Shares of the Taiwanese giant grew by 12%.
Bob Swan, the CEO of Intel, defends the company and its proceedings, stating that the need for his products is “as high as it has ever been”. Tech companies have indeed seen consistent growth in 2020, as they benefit from the work-from-home economy. Despite the recent dip, Intel exceeded expectation in its quarterly earnings, ending Q2 up by 20% year-on-year.
As Intel’s future is marked by uncertainty, the US chipmaker is enthusiastic at the prospect of expanding the range of industries it provides for. This could ensure a more secure position amongst the competition and lead way to further successes.
By: Zuzanna Potocka