Chip stock Intel (INTC) has—and fairly recently, too—managed something of a come-from-behind victory. Just a few months ago, Intel looked like it was on its last legs. It was firing people, selling buildings, basically acting like a company engaging in a going out of business sale. But Intel did not go out of business. It carried on, and instead, it came back. It got major new investment, it brought out new products, it brought out new processes. And now, TSMC (TSM) is looking at Intel and making it clear it is not worried about Intel taking the top slot. That was a huge step forward from where Intel was, and Intel shares gained fractionally in Thursday afternoon’s trading.
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TSMC’s CEO, C.C. Wei, made it clear that he does not regard Intel as a threat. Wei made it clear: competitors cannot simply walk in, throw capital at advanced chip processes, and suddenly beat TSMC. This is actually good news for Intel; recent reports suggested that Intel could take the number two slot. And with TSMC convinced that Intel is not a threat to its own standing as number one, the number two slot looks all the more plausible. Otherwise, Wei would be laughing at the idea that Intel could succeed at all.
Right now, a lot of Intel’s potential market is, essentially, “spill-off” customers who cannot get an order placed at TSMC because TSMC is sufficiently overbooked that it simply cannot fill the order. And with Intel bringing out new chip-building processes like 18A and 14A, Intel may actually be able to do more than just land spill-off; it could actually make some customers change their minds altogether.
But Where Are the Boards?
One issue, however, recently cropped up that could pose a problem for Intel. Two of its partners recently noted that they have not yet received samples of the B770 graphics system yet. The partners in question are “add-in-card” partners, who would need test boards of the system to ensure their own products will work with the B770.
The partners also noted that they cannot “…confirm whether the product is still on track to launch.” While test boards do currently exist, one of the partners noted, the boards are still wholly contained in Intel’s labs. This means there is no such hardware on hand, and there is no clear signal when the hardware will be available. This may mean that the hardware is coming later, or may be delayed, but right now that is strictly supposition.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on seven Buys, 19 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 147.69% rally in its share price over the past year, the average INTC price target of $42.85 per share implies 11.93% downside risk.
