Intel (INTC) 🖥 🍟 - Share Chat

I don’t think anything has changed significantly from what the Intel execs said on the Q1 earnings call - Intel (INTC) 🖥 🍟 - Share Chat - #54 by woodyblade

They implied then that Q2 would be worse and the second half of the year “should” be better.

Got some expected funding from the EU - Intel Germany Mega Site Gets €6.8bn in European Chips Act Funding | Tom's Hardware

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I think the the only real change is that they are further extending some of the ramp delays they mentioned in Q1.

I’m not getting any more just yet, the entire value of Intel hinges on this turnaround story materialising. I bought some (at about this price) based on their vision with the plan to continue to buy in as they successfully execute on their milestones. The problem is that even after big delays they are still stumbling with SR ramp being delayed yet again.

I don’t think this delay matters much in isolation (SR is an entirely uncompetitive product anyway) but they have so many big milestones to hit (across Architecture, Gate design, Process, Lithography, Packaging) by 2025 to reclaim leadership that they really can’t afford to falter on any of them.

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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 - How TSMC Keeps Getting Better - YouTube
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, it’s why executing this plan is so critical for Intel. They need IFS to be successful because without a foundry offering they won’t achieve they scale needed to justify having fabs in house.


What about insiders buying? They’ve 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 won’t. We’ll 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?

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Simply wallstreet have them well undervalued

(Not investment advice)

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.

I’ll not mention price specifically, but will indicate I’m 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

I’ll 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 won’t 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.

Intel’s 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 it’ll 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. I’ll buy some today and then again at $36 if we get to that level. Crazy times.


I just bought in at $39. Seems too cheap not too although I appreciate the explanation of risk above.


Buying more INTC today. I think at its worst we’ll be sitting at $34.

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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 “constructive” thoughts. :slightly_smiling_face: (I’m fully aware I have a mono-tone Yorkshire accent - I’m working on some improvements here :no_mouth: )
NOTE: Not investment advice - Sharing personal analysis based on personal assumptions.

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I’ve got INTC as being worth around $52 just as it is. If foundry produces growth in the high single digits then I’ve got INTC in the mid $60’s. I’m 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 haven’t 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 isn’t well suited for video. Assume the viewer is familiar with a vanilla DCF and doesn’t 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.