Intel's (INTC, Financial) new CEO, Chen Liwu, is contemplating a significant overhaul of the company's foundry business. The focus is shifting towards the 14A process to directly compete with rivals and attract major clients like Apple (AAPL) and NVIDIA (NVDA). Industry sources reveal that Intel's current 18A process is struggling to draw new customers, prompting the potential reallocation of resources to the more competitive 14A node.
If Intel decides to halt the promotion of the 18A process, it could face asset impairments ranging from hundreds of millions to billions of dollars. This complex decision involves substantial financial considerations, with the board expected to make a final decision in the coming months. However, this potential shift will not affect Intel's internal product divisions or existing external clients such as Microsoft (MSFT) and Amazon (AMZN) AWS.
Morgan Stanley has commented that the immediate impact of this move is minimal, maintaining an "equal-weight" rating for Intel's stock with a target price of $23. Analysts, led by Joseph Moore, noted that ambitions for the 18A process had already been scaled back, and the potential financial impact is limited. Despite recent challenges, Intel retains a significant share in the client and server CPU markets.
