Intel just reported earnings and said, “look investors, we’re just not what we used to be. We’ve been forced to delay our manufacturing and soon we’ll hand it over to China.” Intel was the United States’ last bastion of chip-making champions not to have sold out to foreign rivals. Its shares are now down 16%.
Chances are you own an Intel computer chip in one of your devices. It’s the brain of your computer, phone, or games console; the tiniest but most expensive and magical components. Intel still makes the best chips, but not fast enough.
It’s finally succumbed the Taiwan Semiconductor Manufacturing Company (TSMC). It’s considering “outsourcing,” but that means handing over all the trade secrets behind its leading chip designs. Taiwan Semiconductor does not consider Taiwan an independent state.
In the view of investors, Intel is not a growth stock anymore. Its current chips will be leap-frogged and Intel will get little out of Taiwan Semiconductor’s future innovations. It’s got to prove its worth more alive than dead to Taiwan Semiconductor, as without its own factories, it’s toothless. In the view of politicians, this is trade secrets falling into the wrong hands.
The Invstr community will hang in there for now. This is a multi-billion-dollar business that has doubled in value in five years – that’s rare – so losing 16% in one day could make it oversold. Chris Rolland, analyst for Susquehanna, says this a permanent dominance shift but we haven’t had confirmation of the outsourcing yet. It’s never over until it’s over!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.