Intel Foundry Day Takeaway: Revenue Scale Is 'Several Years' Away, Analysts Say

Benzinga ·  Feb 23 15:28

Intel (NASDAQ:INTC) stock is up about 70% over the past year. So far in 2024, however, the stock is down 14%. The stock has been piquing investor interest lately with the launch of the world's first systems foundry designed for the artificial intelligence (AI) era.

The company unveiled a new roadmap featuring 14A process technology, specialized node evolutions, and the Intel Foundry Advanced System Assembly and Test (ASAT) capabilities to assist customers in realizing their AI ambitions.

A significant design win was announced as Microsoft CEO Satya Nadella revealed that the Redmond, Washington-based company had selected a chip design to be produced on the Intel 18A process.

Furthermore, ecosystem partners such as Synopsys (NASDAQ:SNPS), Cadence (NASDAQ:CDNS), Siemens, and Ansys (NASDAQ:ANSS) announced validated tools, design flows, and intellectual property (IP) portfolios prepared to facilitate customer designs.

The Intel Analyst: JPMorgan analyst Harlan Sur has an Underweight rating on the stock with a year-end price target of $37. Sur reviewed the Intel Foundry news and assessed its impact on the business and stock.

The Intel Thesis: Sur notes Intel Foundry's impressive execution, delivering five nodes in four years and launching Clearwater Forest processors on the 18A node. The introduction of the 14A process technology extends the roadmap through 2027, showcasing a commitment to technological advancement.

With Intel Foundry expanding its lifetime deal value to $15 billion and securing Microsoft as a customer for the 18A node, the company demonstrates robust revenue growth and strategic partnerships. These undisclosed long-term deals indicate a sustained revenue stream.

Also Read: Intel To Manufacture Microsoft Chips, CEO Satya Nadella Says

However, "it will take several years for the team to drive customer/revenue scale in foundry," said Sur.

Sur emphasized Foundry's strategic move beyond chip manufacturing to a systems solution approach, addressing AI system requirements comprehensively. Collaborations with industry leaders like Arm (NASDAQ:ARM) and partnerships across diverse ecosystems position the company competitively.

Sur also highlighted Foundry's technological advantages, including the early adoption of backside power delivery and Gate-All-Around (GAA) transistors in the 18A and 20A nodes. Collaborations with UMC and Tower Semiconductor for mature-node 65nm chips contribute to the company's competitive positioning, said Sur.

INTC Price Action: Intel stock was trading at $43.15 at the time of publication.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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