Intel Corporation (NASDAQ: $INTC) is a leading American multinational corporation pioneering semiconductor chip innovations that power the modern digital world.
Biden Boosts Intel with $20 Billion
On March 20, 2024, in a strategic move to revive domestic semiconductor production, the Biden administration awarded Intel Corporation nearly $20 billion in federal grants and loans. This unprecedented investment underscores the nation’s commitment to regaining its position as a global leader in the semiconductor industry, a realm that Asian powerhouses have long dominated.
The allocation of $8.5 billion in grants and up to $11 billion in loans is poised to supercharge Intel’s manufacturing capabilities in Arizona, paving the way for the construction of two new factories and the modernization of an existing one. An additional $3.5 billion from the Commerce Department is expected to enhance security at Intel’s Arizona facilities, which produce sensitive chips for the military and intelligence agencies.
Rebuilding American Chip Supremacy
For decades, Intel reigned supreme as the world’s top producer of the fastest and most advanced chips. However, the tides turned in the 2010s as the nation’s grip on this critical technology began to loosen. Taiwanese and Korean rivals, such as TSMC, surged ahead, leaving Intel struggling to keep pace with inferior products and dwindling profit margins.
The federal funding aims to help Intel reclaim its technological edge and reduce the US’s reliance on chip imports, especially from China and Taiwan. America’s share of the global semiconductor manufacturing industry was only 12% in 2020 compared to 37% in 1990.
A $100 Billion Nationwide Investment Spree
This federal package is just the start; Intel has announced plans for a $100 billion investment blitz in four US states: Arizona, New Mexico, Oregon, and Ohio. The goal is to have 50% of the world’s advanced semiconductor supply manufactured in the US and Europe by 2030. CEO Pat Gelsinger calls it imperative for “national security” in the wake of pandemic-driven supply chain chaos.
Reviving Domestic Chipmaking at a Critical Juncture
“It’s been economically uncompetitive to build plants in the US compared with East Asia. These awards help redress that imbalance,” Gelsinger stated.
The funding comes from the bipartisan CHIPS Act of 2022, which allocated $39 billion in semiconductor grants plus $75 billion in loans and guarantees. Commerce Secretary Gina Raimondo hailed Intel’s “huge deal” award to hit America’s target of producing one-fifth of global advanced logic chips by 2030.
Revitalizing US Chip Manufacturing with Investment
Around 30% of Intel’s $100 billion investment will cover construction costs like labor and materials. The remaining 70% is earmarked for purchasing cutting-edge chipmaking equipment from suppliers like ASML, Tokyo Electron, and Applied Materials.
This comprehensive strategy aims to rebuild the entire semiconductor supply chain on US shores after decades of manufacturing shifted to Asia. Over 30,000 construction and manufacturing jobs are expected to be created across Intel’s four state projects.
While applauding the federal funding, Gelsinger cautioned that “a CHIPS II” initiative may eventually be needed. He said the US lost chip manufacturing over decades and suggested more than the current support program might be needed to reverse the trend fully.
Intel Stock Performance
Intel Corporation’s stock closed trading on Wednesday, March 20, at $42.20 per share, a 0.36% gain from the previous closing price of $42.05. Throughout today’s trading session, the stock fluctuated between a low of $42.04 and a high of $43.01.
Over the past 12 months, INTC has experienced a notable 49.48% change in its stock price. During this period, the highest price reached was $51.28, while the lowest was $26.86. This performance aligns closely with the broader S&P 500 index, which has seen a 31.54% change over the same timeframe. Intel’s 50-day moving average currently stands at $44.61, and the stock has traded an average volume of 44.16 million shares over the last three months.
Is Intel Stock Still a Buy?
Analysts project a positive outlook for Intel, with a consensus price target of $47.22, indicating a potential 12.08% increase from the current price. Of 36 analysts covering INTC, 8 recommend buying the stock, citing growth prospects and strategic investments in semiconductor manufacturing.
In light of Intel’s substantial government backing and strategic investments in semiconductor manufacturing, INTC stock offers a promising opportunity for investors. With a defined growth plan and a focus on innovation, INTC is well-positioned to benefit from the resurgence of domestic semiconductor production. Investors might view adding INTC stock to their portfolio as a smart decision, expecting potential gains soon.
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