Intel’s Troubles – Global Markets

Intel stock has been experiencing negative momentum recently. Since the beginning of the year, the stock has fallen by almost 20%, while the chip stock index has jumped by almost 50% at the same time. Intel’s tough times (NYSE: INTC) could last into 2021, at least Morgan Bank analyst Stanley Joseph Moore predicts.

Moore predicts that the coming year will continue to be administratively challenging for the chip giant, given the continued demand from shareholders to make changes in the company. Moore mainly mentions the problem of Intel deciding how it wants to operate its new processor program, the five nanometer. At present, only the advanced processors are manufactured in Taiwan, because only the plant in Taiwan has demonstrated such delicate manufacturing capabilities.

According to Morgan Stanley, Intel has not yet decided whether to outsource production at high rates: “Despite the efficiency inherent in this choice, Intel has an understandable unwillingness to fully commit to the road, given the historical importance of production in the company.” In his opinion, it is time for the company to outsource the company’s advanced project, or to understand how it can produce itself.

Yesterday, a letter was received at Intel’s offices sent from Third Point hedge fund owner Daniel Loeb. The hedge fund holds the company’s shares worth $ 1 billion, and Loeb demands that an external consultant examine several options to incentivize the company’s operations. He believes that a split should be made between the chip development business and their manufacturing. Other issues that have come up are competition from advanced microcomputers (AMD), the difficulty in retaining talent and the threat of companies like Apple to produce their own chips.

Two other criticisms voiced by Intel investors are the absence of veterans from the chip industry on the company’s board of directors and the fact that CEO Bob Swan is not an engineer. For strong financial management, it’s time for someone from the executive suite to talk to investors on the company’s roadmap in the coming years as well, “Moore wrote.

“Customers’ trust in the roadmap is even more important, and Intel needs someone in the executive suite who can talk about these issues, in addition to strong financial management,” Moore wrote. Moore even pushes to give up the company’s recent acquisitions, including Mobilai. “They are not valuable but do not significantly affect profits, and do not overlap much with the core business,” he explained.