Still Pretending Intel Might Win
AMD is now potentially in the fold.
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Days ago, I called Intel a potential underdog in what might become one of the greatest corporate turnarounds in tech history. Take it with a grain of salt, but the chance is, in my opinion, greater than 0%.
Yesterday’s news — first reported by Semafor — adds another layer: Intel is in early talks to bring AMD on board as a foundry customer, the report says. While no deal is guaranteed, such a move would be a remarkable vote of confidence.
AMD, after all, currently relies heavily on Taiwan’s TSMC for its chip production. Even partial migration of AMD’s manufacturing to Intel would underscore Intel’s growing relevance in U.S. semiconductor policy and industry strategy.
The market reacted swiftly — Intel shares jumped about 3.5% on the news and are now up roughly 77% year-to-date.
The news comes on the heels of a series of other powerful endorsements. In the past seven weeks alone, Intel has secured capital or support from the White House, Nvidia, SoftBank, and reportedly has Apple and TSMC in the mix of ongoing talks. Now, you can add AMD to the list.
That’s whole fucking chip industry for the most part — the most important players in global semiconductors and the U.S. government itself. Together, they could be positioning Intel as America’s semiconductor champion.
As I said a couple days ago, Intel’s turnaround isn’t just about fixing manufacturing stumbles. It’s about political, financial, and corporate heavyweights aligning to ensure Intel succeeds.
Washington needs a U.S.-based semiconductor leader. Corporate America needs a large-scale domestic foundry alternative. Investors need exposure to the chip boom without paying Nvidia’s astronomical multiples. Intel sits squarely at the intersection of all three.
At a valuation still around 2.75x sales — compared to Nvidia’s 26x — the upside remains enormous if Intel continues to shed its “laggard” reputation and cements its role as the indispensable anchor of America’s chip ecosystem.
I have been crowing about Intel since it was trading perpetually between $19 and $25, when people thought the company was headed for bankruptcy.
At $35, after multiple bouts of skepticism, I continue to hold exposure — because the story appears to only be getting stronger. Technically, I’m looking to see if $35 goes from resistance to support. After that, next stop could be $50, should it happen.
With AMD now potentially in the fold, the case for Intel as one of the greatest turnaround efforts in corporate history grows even harder to ignore.
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What always rattled me about Intel was that their technical staff generally exhibited average individual skill levels well beyond that of AMD and other competitors, yet they were organized and "copy exactly" trained into gaining relatively little reward from their extraordinary talent pool. The thesis of Intel going up further near-term may well be true, but they have too many flawed well enforced corporate practices to get out of their own way. They have to make major philosophical changes in their practices which do not come easy in an entrenched corporate culture. If they are to perform well in the longer-term they have to free up their often incredible talent pool to allow them enough freedom to take rational risks.
About 17 years ago, the president of the USA invested taxpayer money into a few New Green Deal companies. As of today, most of those companies no longer exist, and the taxpayer money was lost. That same president also intervened in the auto manufacturing business. Creating a special bankruptcy court for one, then providing financial support to produce EV's which most manufacturers would otherwise lose money on. Today those manufacturers are cutting back or getting out of the EV business. More taxpayer money lost.
The point here is, if government is needed to support the existence of a corporate entity, chances are it will either fail or become a zombie company.