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Intel Stock Tumbles 8% After Foundry Business Disappoints

Intel – ★★★★ – Ranked #30 in Q2 2024 Large Cap Equity Rankings

Shares of Intel (INTC) fell 8% on Wednesday after the chipmaker disclosed worse-than-expected financial results for its nascent foundry operations. Wall Street analysts expressed doubts about the unit's near-term prospects.

During its investor meeting Tuesday, Intel executives detailed plans to split the company's operations into two businesses:

1. Intel Products unit selling finished chips

2. Intel Foundry unit providing contract chipmaking services

Currently, the Intel Foundry business gets 95% of its revenue from the Products unit itself. Intel Foundry posted a staggering $7 billion operating loss in 2023, worse than the $5.2 billion loss in 2022. Revenue at the unit plunged 31% year-over-year to $18.9 billion.

The deepening red ink raises doubts about Intel Foundry's ability to gain meaningful market share from TSMC and other established players like Samsung in the contract chip manufacturing space.

Intel aims to make its foundry business more attractive to external customers, but analysts questioned the achievability of those plans given the escalating losses. The company faces an uphill climb to transform into a major third-party chipmaker.

With Intel's core PC and data center chip sales still struggling, the worsening foundry losses compounded investor concerns about the company's overall turnaround efforts. Intel stock has now fallen over 30% from last year's highs amid the myriad challenges.


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