Anybody liking Intel at this price?
Sure.
I like 'em bulletproof and cheap. Cheap even if you assume a poor outlook.
Iâm willing to reduce my expectations for growth rates if those two are met.
For whatever itâs worth, Value Lineâs projections are generally a nice guide to market consensus.
(not the same as correct or useful, but at least what the average analyst is thinking)
They expect EPS around $6 and a modest P/E of 12 in the stretch 3-5 years from now, suggesting price targets around $65-80.
That makes todayâs $36.30 look pretty good.
The lowest end of their price range, with the longest end of their time outlook, would still be 13.6%/year compoundedâŚplus the dividend yield which is 3.6% on entry price.
This isnât a reason to invest, but itâs certainly a reason to consider looking into it.
I donât own any, but itâs my kind of thing.
The price is tanking, the mood is terrible, but they arenât going anywhere.
And, oh, did anyone notice the CHIPS act? cui bono?
In a way, it could be viewed as a balance to Apple.
Valuation levels: optimistic versus pessimistic.
Exposure to China risk: high versus negative.
Jim
16 Likes
They expect EPS around $6 and a modest P/E of 12 in the stretch 3-5 years from now, suggesting price targets around $65-80
Well, since 2018, operating income has decreased by about 17%, and eps 2018 vs 2022 projections are down 6.5% compounded annually. What is the rationale for it almost doubling in about four years?
I havenât looked into Intel for a long time (Iâm only looking for wonderful businesses), but given the past four years, it seems like having them simply maintain current earnings would be somewhat optimistic. So if after years of flat Mr. Market has about the same enthusiasm for INTC as today, youâll get the dividend yield of 3.6% (which just happens to be a tad lower than the current-year earnings yield for MicrosoftâŚand Apple).
(I love the data on ValueLine, but as to their projections, I avoid them like the plague; they are so often wildly off, and once you see their number, itâs hard to unsee it.)
12 Likes
âAnybody liking Intel at this price?â
Yes. Iâve been buying INTC since early May of this year, averaging down (ouch). My last purchase was July 1st at $36.11. Like Morningstar, though, Iâve lowered my estimate of INTCâs value, so $36 is not quite the bargain I thought it was. Itâs still a bargain, though. A P/E of 6.6 is too low for a company with 27% ROE and rising sales.
INTC has made a number of major mistakes in the last several years. Losing Appleâs business was huge (Apple is now 17% of Taiwan Semiconductorâs business). INTCâs 7nm chips will not come onto the market until 2023, and some of those will be made by TSM (how embarrassing). Meanwhile Samsung is producing 3nm chips (Samsungâs smartphone chips are already 5nm). INTEL is no slouch, though. They know how to make chips. Theyâll come back. Itâs going to take a few years and $100B in capital spending, but donât count them out.
PS. Iâm hedging my bet by also owning TSM, as well as foundry-less chip maker QCOM and foundry equipment maker ASML. Wish me luck.
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intelâs problem can be summarized in their gross margin has gone down by 500 basis points and their net margin has gone up by 500 basis points. Thatâs a 1000 basis point swing of increased profitability in the last decade. During the same time, they had product delays, basically allowed AMD to resurrect, NVDIA can massive share on graphics chip⌠to AI. If net margin mean-revertsâŚ
2 Likes
I am afraid of liking anything nowaday. I liked Baba. Then baba tanked! 
If China bomb Taiwan or shoot down Pelosiâa airplane, baba will tank and Intel will benefit.
In the book snowball, Bill gates told Buffett there were two stocks that Buffett should buy: Microsoft and Intel.
ASML is a supplier to Intel and is trading at 200B mktcap. Intel is at 148B. One of the numbers is wrong
ASML is a supplier to Intel and is trading at 200B mktcap. Intel is at 148B. One of the numbers is wrong
Maybe if Intel were ASMLâs sole customer, but itâs my understanding that ASML is a supplier to all the major chip manufacturers and is the only supplier whose equipment can manufacture the most advanced chips. See https://www.cnbc.com/2021/11/24/asml-the-biggest-company-in-âŚ.
So just because ASML is a supplier to Intel doesnât necessarily mean Intel should be worth more.
ASML is a supplier to Intel and is trading at 200B mktcap. Intel is at 148B. One of the numbers is wrong
Not necessarily. Some suppliers can justifiable have a larger market cap. ASML is no ordinary supplier, itâs a monopoly. It is the only company that manufactures EUV lithography machines, which is the most advanced type of equipment needed to manufacture todayâs most advanced processor chips. In addition to Intel, it also supplies to TSMC and Samsung. All 3 have equity stakes in ASML.
Some suppliers can justifiable have a larger market cap. ASML is no ordinary supplier, itâs a monopoly. It is the only company that manufactures EUV lithography machines, which is the most advanced type of equipment needed to manufacture todayâs most advanced processor chips.
Itâs not only ASML, they rely on technology from Trumpf and Zeiss thatâs not available from anyone else. The technology is mind boggling. To create 13.5nm DUV a droplet generator creates 50,000 zinc droplets per second that are hit by 50,000 laser pulses per second to create plasma. This crteates DUV light that is focused by mirrors onto the wafers (lenses donât work at this wavelength). The mirror surfaces are finished with electron beams that can tear of single atom layers for the required precision.
It will take many many years if not decades for the chinese to reverse engineer all this if weâre not dumb enough to give them this technology or let them steal it.
8 Likes
âIt will take many many years if not decades for the chinese to reverse engineer all this if weâre not dumb enough to give them this technology or let them steal it.â
According to this article Chinese chip maker SMIC is making 7nm chips using deep UV (DUV) as opposed to extreme UV (EUV). It can be done, although itâs more expensive. The article states that Taiwan Semiconductor and Samsung made 7nm chips using DUV before switching to EUV.
https://www.theregister.com/2022/07/22/china_smic_7nm_chips/âŚ
Intel is definitely behind, but theyâre catching up. Samsung and TSM started making 5nm chips, which they sell to Apple and Qualcom, in 2020. Samsung is now making 3nm chips, with TSM expected to follow this year. Intel has a roadmap for moving from 10nm to 7nm to 5nm to 3nm to 1.8nm by late 2024. Weâll see.
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Mtt writes: It will take many many years if not decades for the chinese to reverse engineer all this
Some 9-day old News?
Semiconductor Manufacturing International Corporation (SMIC) is a Chinese Government owned entity, and a primary target of USâs efforts to block technology development.
SMIC is reported to be shipping 7nm chips for mining Bitcoin.
July, 21, 2022
Chinaâs Top Chipmaker Achieves Breakthrough Despite US Curbs
SMIC has started shipping 7nm chips, TechInsights says
US suppliers need licenses to ship most advanced gear to SMIC
https://www.bloomberg.com/news/articles/2022-07-21/china-s-tâŚ
The Shanghai-based manufacturer is shipping Bitcoin-mining semiconductors built using 7-nanometer technology, industry watcher.
How bout that? A use for Bitcoin - providing a stepping stone for Chinese development of advanced chips.
The news has been reported by Bloomberg, NYT, and other sources. I assume Bloomberg and NYT verified it?
And same news, but July 28, from NYT.
China Has Leapfrogged the U.S. in Key Technologies. Can a New Law Help?
While Congress argued over whether and how to support American chip makers and research in other technologies, China was surging ahead.
https://www.nytimes.com/2022/07/28/us/politics/us-china-semiâŚ
July 23.
Chinaâs 7 Nanometer Chip is a Basic, Simple and Small Chip
https://www.nextbigfuture.com/2022/07/chinas-7-nanometer-chiâŚ
ralph thinks the US, and EU needs to light a fire under the home team.
According to this article Chinese chip maker SMIC is making 7nm chips using deep UV (DUV) as opposed to extreme UV (EUV). It can be done, although itâs more expensive. The article states that Taiwan Semiconductor and Samsung made 7nm chips using DUV before switching to EUV.
7nm seems to be doable with DUV and we certainly shouldnât sell the chinese DUV equipment! Samsung and TSMC are preparing to use EUV for 3nm though.
Hey Folks,
On INTC - I read maybe 6 months ago, that INTC has sort of a fundamental / architectural challenge in that all of their chip design data is in a proprietary application that is not fully compatible with modern day chip design apps?
https://community.intel.com/t5/Software-Archive/How-SoftwareâŚ
I think that the industry is moving towards open source chip design architecture, which could also limit growth of INTC.
Soft paywall -
https://www.bloomberg.com/news/articles/2020-01-22/open-sourâŚ
I have no dog in this fight but thought Iâd add to the discussion with what I think, when I hear Intel.
'38Packard
- way long time Intel / PC / Windows user and more
1 Like
Intel has a roadmap for moving from 10nm to 7nm to 5nm to 3nm to 1.8nm by late 2024. Weâll see.
I donât know whether in the case of Intel a roadmap isnât just wishful thinking as their execution has been just terrible in recent years. At the moment theyâre botching their GPU launch and according to some leaks the whole consumer GPU lineup is currently âunder evaluationâ. A different product segment of course, but emblematic of the companyâs failures.
5 Likes