Intel (INTC -3.05%) The stock lost ground in Tuesday’s trading. The semiconductor company’s stock price was down 2.6% as of 1:45 pm ET, and had fallen as much as 3.2% earlier in the daily session.
Intel’s stock is falling later today Taiwan Semiconductor Manufacturing founder Morris Chang made comments criticizing the US-based company’s strategy and execution in the chip manufacturing space. TSMC is the clear leader in the contract semiconductor manufacturing market, and Intel has spent billions trying to match its rival’s production capabilities.
TSMC founder thinks Intel’s manufacturing bet was a mistake
Following the recent departure of former CEO Pat Gelsinger, Chang yesterday criticized Intel’s push into the chip foundry space. Chang pointed out that Intel should be focused on improving its position in the design of artificial intelligence (AI) chips, instead of trying to become a major player in third-party chip manufacturing services.
Intel occupies a unique position in the semiconductor market because it has substantial manufacturing capabilities in addition to its design business, and the company manufactures many of its own chips. Meanwhile, most other chip designers opt to have their chips manufactured by a third party — and no company comes close to TSMC’s position in the fabled space. Intel has invested to improve and expand its manufacturing business, but the big wins in the category have been shown so far.
What’s next for Intel?
Speaking about Intel’s current situation, TSMC’s Chang said: “Currently they have neither a new strategy nor a new CEO. Finding both is very difficult.” While Chang’s assessment of its competitor’s situation may seem harsh, it highlights some of the challenges facing Intel right now.
The company has faced pressure from rivals including Advanced Micro Devices and arm in the central processing unit (CPU) design market, and its foundry initiatives have been heavy on costs and light on results. Bringing a new CEO, and deciding what the company’s strategy will be, are the first important steps in a new turnaround push, and Intel will have to determine if it will move forward with a modified version of its current approach or make a radical departure.
The decision to keep its design and foundry businesses under the same corporate roof appears to be the key strategic issue facing the company now, and other units may be sold as well. But while Intel faces a tough path forward, it’s possible that the stock could see a significant rebound once the uncertainty is resolved and the new strategy becomes clear.
Following today’s sales, Intel shares are now down 60% in 2024.