You guys know how closely I've been following Intel's struggles over the past year, because (a) the company is a huge U.S. manufacturer, (b) it's been caught flat-footed as chip manufacturing has largely become outsourced to Taiwan, and (c) that has major national security implications.
Well, Intel isn't giving up the fight. In his first extended remarks since becoming CEO, Pat Gelsinger last night said Intel will double down on its U.S. manufacturing, investing $20 billion in two new factories in Arizona. He added that Intel hopes to do something akin to what Taiwanese companies have done successfully for rivals like AMD and Nvidia--running its factories for other companies, too, turning them into customers.
It's a big gamble and tech experts can say far better than I how far behind Intel is or how difficult this will be for them to pull off. But domestic chip production will be a huge U.S. advantage in coming years as relations with China remain frosty, not to mention a supply chain benefit as companies realize how much they rely on chip production (e.g. the auto makers right now--GM was just forced to cut production of its pickup trucks because of the chip shortage).
Sending this note out early so you can all catch Intel's new CEO on CNBC in a few moments (11 a.m. sharp!). Bonus: Bernstein analyst Stacy Rasgon, whose perceptive remarks on this situation I quoted last autumn, will be on around 1 p.m. He may help explain why Intel's stock is lagging today: "A foundry business brings significant challenges with many open questions; it is something the company has tried, and failed at, before," he wrote this morning.
We might all hope Intel can pull it off this time around.
See you soon!
Kelly