Yeah very much has been on this big $100bn or so investment commitment for the new fabs and process node improvements
Was a good video last week on TSMC around the automation to improve yields - https://youtu.be/-DCZsT2plw8
And like it was said in the video the volume they get through only continues to improve things quicker with regards to yield and time to market.
Intel have a long way to go
Yeah that video was good, itās why executing this plan is so critical for Intel. They need IFS to be successful because without a foundry offering they wonāt achieve they scale needed to justify having fabs in house.
What about insiders buying? Theyāve been doing so ever since the sub $50 range. Also what are your thoughts on INTC at $40? It feels too cheap to ignore. This turnaround story will either work or it wonāt. Weāll either make or lose a lot of money on this investment in the next 3-5 years.
How are Intel trading at a ~6.5 p/E while AMD & Nvidia are 4-6x more expensive.
Intel is back at 2017 prices.
How much of a risky move is this turn around plan?
The turnaround plan very much rests on Intel meeting their process node roadmap goals, that is key to them being competitive with TSMC and Samsung who are leading on process node advancement/yield, it could also be implied to be competitive with AMD as well, but thats on the product development side as well.
They need to catch up and be on equal footing to have any chance of getting business from Nvidia, Apple etc for their Intel Foundry service, otherwise the big capex investment is going to have a slow or inadequate rate of return.
Iāll not mention price specifically, but will indicate Iām am a little bit down on my position, pretty much off the back of the last few days trading, which you can probably imply my average from.
Yeah this a good summary
Iāll just add that p/e is a bit misleading as Intel are now cash flow negative as a result of the significant capex required. This wonāt turn positive until ~2025 and only if they successfully execute this roadmap. The fabless companies by contrast have almost no capex so they look very different on a FCF basis.
Intelās financials might look like a boring blue chip/vale play, but I think of this from a risk perspective like a huge start-up, because itāll be an entirely different company after this. Intel the old integrated chip maker is basically becoming Intel the fabless designer + IFS
Good way of looking at it, when you put it this way the risks definitely seem higher. Iāll buy some today and then again at $36 if we get to that level. Crazy times.
Buying more INTC today. I think at its worst weāll be sitting at $34.
I recently created a video that takes you through my updated DCF model for Intel.
It shows the intrinsic value and IRR based on my assumptions. There is also scenario analysis covering the bear case and bull case.
I have just started sharing my models with the private investor community and am interested in hearing your āconstructiveā thoughts. 
(Iām fully aware I have a mono-tone Yorkshire accent - Iām working on some improvements here 
)
NOTE: Not investment advice - Sharing personal analysis based on personal assumptions.
Iāve got INTC as being worth around $52 just as it is. If foundry produces growth in the high single digits then Iāve got INTC in the mid $60ās. Iām a buyer of INTC from $43 and below personally.
Hopefully this is constructive:
Firstly, in some of your figures and assumptions you are forecasting a lot of free cashflow in the next few years (before 2025) this is a pretty radical assumption which requires at least a bit of explanation. Intel themselves predict negative $1-2bn FCF in 2022, yet even your bear case is positive.
Second is less about the actual numbers you arrived at but rather the content, you havenāt even given any kind of story or justification to your 3 scenarios. I think at an absolute minimum you need to break it out into business segments and give some reasoning for the performance of each. You just jump from revenue to FCF without any discussion of margin (which is obviously a huge factor for Intel)
For example: you are estimating 3% revenue growth next year, which segments are driving that and what brings about the reversal in those segments? How can Intel grow both revenue and margin?
Finally, leave most of your working in the text post, it isnāt well suited for video. Assume the viewer is familiar with a vanilla DCF and doesnāt need to see the workings. I care much more about your views on when and how Intel will regain 50% margin than the purely mechanical steps of working this through into an intrinsic value.
Thanks for your response Cameron. I will take it as constructive 
Firstly, thanks for the challenge on the cash flow numbers. It is easy to get number-blind, so I always appreciate someone casting their eyes on the details.
The negative $1-2 billion FCF mentioned in the earnings deck reflects managementās adjusted free cash flow outlook. The numbers in the model are for unlevered free cash flow, which is a different free cash flow calculation. However, you have forced me to run through the numbers again as I still get positive FCF when using the operating free cash flow ā CAPEX formula for FCF.
Working my way backwards - my CAPEX numbers pretty much align with projections; therefore, my operating cash flow must be higher. Looking at the base case scenario as an example, I have revenue growth of -4%, gross margin of 53% and an operating margin of 25%.
Guidance and analystsā revenue projections are around $76b. I have revenue in 2022 at $75.9b, so that seems to align ok. Management guided 52% for gross margin, so I am 1% higher. Q1 gross margin was 53.1%. I have the operating margin at 25%, which I reduced vs previous years. Last yearās operating margin was 28%, and the 5-year average is 32%. However, the operating margin in Q1 was around 23.5% (depending on GAAP or non-GAAP), so I could have gone lower.
If I change the model so that the gross margin is 52% rather than 53%, and change the operating margin to 23% from 25%, I get negative free cash flow (operating cash flow ā CAPEX), but I still get positive unlevered free cash flow for 2022, albeit lower at Ā£286m. If I replicate this change for the forecasts over the next five years but add in some progression towards the management goals of gross margins of 54%-58% and operating margins of 30% (2026 = gross margin of 55%, and operating margin of 27% - so still conservative); I end up with an intrinsic value per share of $43.78 rather than $49.38. I will review the progress in the subsequent earnings to see how the actuals are falling and refresh the model again.
Also, thank you for the advice relating to the video. It is interesting as others have said they like to see the calculations. I suppose it is a personal preference.
I get what you are saying about wanting more information on when and how margins will change rather than seeing model inputs and outputs. I also enjoy reading these views from others, and I used to write about this. Many people do this already, and far better than I would. Therefore, I am focusing on sharing models, as many people still like to see this element to complement their other reading. But again, I suppose it is a personal preference.
Thanks again for the challenge and feedback. I look forward to more in the future . Good luck with your investments; I hope they are being kind to you! 
Great conversation
I really wish theyād cut their dividend completely until the foundry business is readyā¦
Some good news for IFS:
Horrible earnings. Absolutely gutted. The thesis has definitely changed for me. I will see AMDās earnings before deciding if I should sell out. If I see that AMD is not affected then I will have to sell INTC. I will use that capital to invest into monopolies like KLAC and ASML. I canāt believe that revenue and margin drop. No wonder the CEO has been begging for the chips act to pass. Really doubting management right now, especially as they seem adamant on maintaining the dividend. Anyone with half a brain will realise that the companies future with the foundry business is far more important than maintaining investor retention in the stock using a dividend.
I know Iāve been pretty bearish despite my small speculative position but this is actually shocking. Intel needed the chip shortage to continue so they could keep selling to customers with no alternative supplier while they tried to catch up, it seems that time is over.
The wait until 2025 is probably going to be very painful now.
The problem with data centre is that you are always selling on a performance/total cost of ownership basis and because of the massive efficiency disparity Intel could almost give these chips away and still lose out to a $8k Genoa CPU from AMD. Worse still Intelās Sapphire Rapids likely cost more to produce because of the massive die size.
Thoughts now that its been a couple days since earnings? Also AMD reporting today, will likely crush it.
The only thing keeping me in INTC at the moment is that it is a strategic company thats in the best interest of the USAās national security.
