Intel - INTC - Share Chat

[RiemenTrader]

[TradingView - AMD posting a 17x return, outperforming nearly 38 times the return that Intel gave, excl. dividend pocket money]

AMD has been the bearer of great returns for many investors providing a 17 fold return on investment in just 5 years. A reasonable PE ratio of around 37, not dramatically outpacing the S&P500 benchmark everyone loves, that tells us that AMD still has growth ahead.

I could dive into fundamentals and share charts of future growth of the technology sector but I think Intel could be the better bet now… why?
Simply because a China-Taiwan crisis produces asymmetrical risk that cannot be ignored!

[Image from Foreign Affairs - Although war is not a certainty, nor wished for by any reasonable person. China has made its desires known. Even physical embargoes and a drawn out cold war could cause dire disruptions to market that China is currently hedging itself against, with domestic production growth in fabs.]

To be clear, AMD uses TSMC for all its production. It does not produce any chips itself.
Of the 17 TSMC fab locations, all except 1 are located within either China or Taiwan. That is the TSMC WaferTech Fab in the USA that produces 160 nm chips that are of no use to AMD.

Intel on the other hand has virtually all its manufacturing on US soil for the x86 architecture that competes directly with AMD. Furthermore, Intel is venturing into the GPU market and although this is being outsourced to TSMC currently, Intel has the capability (possibly not the capacity) to produce this in-house.

Even Apple’s new M1 chip comes from Taiwan. The asymmetry is clear as day, and rather embarrassingly, the F35 fighter jet that could aid in protecting Taiwan has its chips come from Taiwan.

So when the Pentagon realises its mistakes, and China pushes for more domestic production of chips, we really have to ask… can we hold AMD through that or is Intel the better bet?

To wrap up this thought, please just pretend that RISC-V cannot slide into these markets to dethrone AMD and Intel as the kings of this market should the s**t hit the fan.
Sorry AMD, time to reduce my exposure.

Edit: typo

[NeilB]

Good piece

Out of interest, how easily would it be for someone to swap from an AMD chip to a comparable Intel chip. Have we seen anyone make this move yet?
Could AMD reshore production in any sensible time frame?

Tidying Note - If we keep stock specific discussions on threads it’s easier for everyone to follow.

Great input and thanks for writing and sharing.

[RiemenTrader]

Thank you for the feedback on posting on specific threads. I wasn’t sure what the etiquette was on that.

The capital cost for restoring AMD manufacturing to US shores would be high. Likely in the $50b range as they would have to acquire globalfoundries (who they spun off) or a similar fab. The turnaround on something like this would be 12-18 months minimum.

Swapping between AMD and Intel is a pain as the sockets are not universal, and differ within each companies SKUs. It’s not impossible to swap, just requires a new motherboard which adds to cost (and e-waste).

[Cameron]

I’ve posted about this elsewhere, I think this risk is overstated.

What is going on today? - Megathread

Few comments here about the potential of China invading Taiwan, which I really don’t think is credible concern and not worth worrying about. If China did invade Taiwan the impact on the markets are the least of your problems, because it means something has already gone incredibly wrong to make that at all viable. Also if it happens you’ll be too busy joining the hordes of people outside shops, because you probably have 24hrs to buy any new tech products you might want for the next decade befor…

@RiemenTrader

Even Apple’s new M1 chip comes from Taiwan. The asymmetry is clear as day, and rather embarrassingly, the F35 fighter jet that could aid in protecting Taiwan has its chips come from Taiwan.

That’s not embarrassing or an accident, US-Taiwan codependency is built upon their mutual reliance for technology and military might respectively. If the US had been willing to sell F-35s to Taiwan as requested then it would be almost perfectly analogous for their relationship.

It’s not just Apple’s M1, it’s almost all of Apples products (80%+ of Apple’s revenue is from TSMC-based products and the remaining 20% is services based on those products). Google, Microsoft, Amazon cloud are all using TSMC-fabbed compute (either directly with inhouse designs or from designers). TSLA hardware (inhouse + AMD, Nvidia) is reliant on TSMC. Then you’ve got all the indirectly impacted companies that rely on CDNs/cloud like Netflix, Disney.

If you remove TSMC hardware then Facebook/Meta might even top out the S&P500 because they are mostly on Intel hardware, but even they would be severely impacted.

Based on the widespread disruption if you do believe China invading Taiwan is a realistic scenario I think there are probably much better positions to consider than long Intel, puts on Apple or S&P500, gold, old iphones, second hand cars, non-perishable food & potassium iodide.

If you wanted to go long a stock as a hedge against WW3 I think Samsung is the more logical choice as it will become the world’s leading high-end foundry (until IFS is up and running) everything currently running through TSMC would be trying to go through Samsung. Likewise GF for less advanced nodes.

@RiemenTrader

The capital cost for restoring AMD manufacturing to US shores would be high. Likely in the $50b range as they would have to acquire globalfoundries (who they spun off) or a similar fab. The turnaround on something like this would be 12-18 months minimum.

Even if TSMC collapsed, no one is going back to in-house fab, the fabless model is proven to be the way forward, with even Intel now embracing it with TSMC outsourcing and IFS. Everyone would have to tape out designs for other foundries (Samsung, IFS) which is expensive, but much cheaper than buying a fab.

I am long TSMC, AMD though so I’m certainly biased. I’ve said elsewhere I’m keeping an eye on Intel because I do think they have a real shot with Diamond Rapids, but I’m not buying at this price.

[rod]

Very interesting reads @RiemenTrader and @Cameron thank you. I thought this was an interesting take on the challenges Intel faces: Intel Betting The Farm – Shrinking Business, Margins Down For Few Years, But Aggressively Investing $40B-$43B A Year And More With Subsidies

[Cameron]

Yeah I think that’s a good piece, I think Intel are absolutely doing the right thing, but these things take time - like 4+ years (hence my interest in DR). It seems likely to me in the intermediate years as market share and margins fall there could be better buying opportunities.

Dr Ian Cutress has a good interview recently he asks the Zen Lead Architect (Mike Clark) how long he was working on Zen before it launched and Mike laughs when Ian suggests “2/3 years?” (timestamped link below) because the reality is 5 years. Later Mike all but confirms that while we are waiting for Zen 4, design work is already taking place for Zen 8.

Ian Interviews #11: Mike Clark, AMD Zen Chief Architect

[RiemenTrader]

I do not believe that a China - Taiwan war is the most likely outcome, I do believe however that China will use pressure to force Taiwan to make concessions, or to use political capital to force foreign nations to reduce trade with Taiwan.

Xi Jinping has been a man of his word regarding his views on China.

Using put options would not be ideal, given there is no certainty on this type of event occurring, whereas holding Intel provides an opportunity to sell weekly hedged calls, cash in on the quarterly dividend, ride the sector growth etc. Then should a Taiwan cold war begin to precipitate out of this slurry of uncertainty, then a sector rebalance would be favourable. I could only dive into a puts tactic if volatility didn’t price me out first, which I think it would.

Samsung’s relative geography to a region that could face heightened tensions, would give me some concern for capital rotation as a means to reduce exposure. So although I agree that Samsung is not really at risk, I feel it would be an awkward position for me personally to take until I understand how the markets will react.

Thank you for the input… yes the risk is overstated, but it is still there and very asymmetric so I feel it is worth holding a small position for myself.

I am still trying to find the RISC-V golden goose though, that would change my position dramatically on this!

[DrunkenMonkey (L Ryan)]

@RiemenTrader

To be clear, AMD uses TSMC for all its production. It does not produce any chips itself.
Of the 17 TSMC fab locations, all except 1 are located within either China or Taiwan. That is the TSMC WaferTech Fab in the USA that produces 160 nm chips that are of no use to AMD.

Intel on the other hand has virtually all its manufacturing on US soil for the x86 architecture that competes directly with AMD. Furthermore, Intel is venturing into the GPU market and although this is being outsourced to TSMC currently, Intel has the capability (possibly not the capacity) to produce this in-house.

Even Apple’s new M1 chip comes from Taiwan. The asymmetry is clear as day, and rather embarrassingly, the F35 fighter jet that could aid in protecting Taiwan has its chips come from Taiwan .

So when the Pentagon realises its mistakes, and China pushes for more domestic production of chips, we really have to ask… can we hold AMD through that or is Intel the better bet?

To wrap up this thought, please just pretend that RISC-V cannot slide into these markets to dethrone AMD and Intel as the kings of this market should the s**t hit the fan.
Sorry AMD, time to reduce my exposure.

Edit: typo

Yes, thank you for this thread.

I am myself going to read up on this subject. My understanding is that the new Intel CEO seems to be driven to bring new change and reinvigorate the company - much like Satya Nadela @ Microsoft. The former CEO was apparently the accountant-type.

Edit: See link → https://www.cnbc.com/2021/11/06/how-intel-plans-to-catch-up-to-samsung-and-tsmc-with-44-billion-of-new-global-chip-fabs.html

[Hpoyo]

Thoughts on INTC hitting $34?

[Hpoyo]

Why isn’t freetrade paying out my INTC dividend? Its been ages since it was releases to shareholders

[SebReitz]

The next one is due on first of September. Or do you mean the June one?

[bitflip]

@Hpoyo

Why isn’t freetrade paying out my INTC dividend?

Please ping money@freetrade.io if you believe that you have missing dividends.

If you are referring to the last dividend the pay date is 1 Sept 2022. Here is a screenshot of the last three payments and payment dates:

[Hpoyo]

Why is the stock down 4%

[Optimisery (Celia)]

Bad earnings … Couple of years this will be back in favour

[Hpoyo]

The INTC chart looks disgusting

[steven2805 (Steven)]

That’s an understatement… Intel has been my worst performer, every time I think it’s over it drops another couple of %. Am fully invested into the sunken cost fallacy at this point haha

[NeilB]

Mobileye spin-off completed

Mobileye pops more than 37% in market debut after spinning out of Intel

Mobileye Global - MBLY - Share chat

[image] Formerly Intel’s assisted-driving and self-driving systems unit. Mobileye develops and deploys advanced driver assistance systems (“ADAS”) and autonomous driving technologies and solutions.

[Cameron]

@Cameron

The wait until 2025 is probably going to be very painful now.

Well it just got more painful, Intel treating the investors like idiots by continuing to pay the dividend throughout this.

Intel Cuts Pay For Employees To Keep Their Quarterly Dividend

I was hoping to be buying in 2023,2024 for a recovery in 2025+ but however ambitious their roadmap was before it’s even more so without talent.

[Coolsmp (Investor R7)]

Dividend cuts for Intel

Intel slashes dividend by over 65%, to 12.5 cents

[latarzanla]

Good, finally. They need to put that money to better use.