Cooperation with AWS
Intel has announced that it is working with AWS to invest in the development of a customer chip for AI computing that will use Intel's advanced 18A technology. This multi-billion dollar deal with a strategic partner like AWS is exactly what Intel needs to support its recovery and expansion strategy. The importance of AWS as the largest cloud service provider gives me confidence that Intel has a great opportunity ahead of it that it can use to expand its semiconductor manufacturing footprint.
Cooperation with AWS could significantly improve market confidence in Intel's ability to compete with foundry leaders such as Taiwan Semiconductor Manufacturing Co. It is also another step in a plan to transform Intel into a chipmaker not only for its own products, but also for external customers.
Reduction of expansion in Europe
On the other hand, Intel announces the postponement of its projects in Germany and Poland, which means some disappointment for the European Union in the context of its ambitions in the field of semiconductor production. It is clear that the company has decided to focus on efficiency and optimization of spending, especially after announcing plans to save $10 billion and reduce the number of employees by 15,000.
U.S. Government in Support of Intel
Another significant move, which we took a closer look at in our monthly analysis in the Blog section, is that Intel will receive up to $3 billion in U.S. government funds to produce chips for the military under the Secure Enclave program. This program is aimed at ensuring a stable supply of advanced chips for defense and intelligence purposes. I see this move as a strengthening of Intel's relations with the government and another opportunity for the company to expand its production capacity, especially within the framework of projects in the US, where Intel is building new plants.
Conclusion: A new era for Intel
From an investor's point of view, I feel that Intel is gradually getting back on track. A combination of strategic agreements such as cooperation with AWS, government subsidies and a focus on key projects in the US can significantly strengthen Intel. Nevertheless, Intel still has a long way to go before it regains full market confidence. Its value is still below $90 billion, far behind Nvidia, which has reached a capitalization of around $2.9 trillion.
Investing in Intel at this stage may present a long-term opportunity, especially if the company delivers on its plans to revive and increase competitiveness in the semiconductor sector. [1]
* Past performance is no guarantee of future results
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
[1] Intel Corp. stock price performance over the past five years: https://tradingeconomics.com/intc:us