Intel (NASDAQ: INTC) stock is trading higher on Monday. The company’s stock was up 2.1% as of 1:15 p.m. ET.
Intel shares are rising after comments made by Taiwan Semiconductor Manufacturing Co. CEO Morris Chan over the weekend. Chang believes the challenges created for his company by restrictions on chip sales to China will be exacerbated. Investors are hoping this momentum could be good news for Intel.
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Taiwan Semiconductor Manufacturing Corporation (commonly known as “TSMC”) is one of the world’s leading semiconductor manufacturers. Although many companies design their own chips, TSMC holds a dominant position when it comes to semiconductor manufacturing. The company’s advantages are even more pronounced when it comes to advanced chips used in artificial intelligence (AI), telecommunications, and next-generation defense applications. As a result, the company’s services are in high demand and the manufacturing industry leader is at the center of geopolitical considerations.
Mr. Zhang said over the weekend that his company’s growth would soon face the “most severe” headwinds due to U.S. restrictions on sales of advanced chips and semiconductor manufacturing equipment to China. Shortly after those comments were made, TSMC announced that it had stopped shipping products to Sofgo because Sofgo’s chips were embedded in AI processors developed by Chinese technology leader Huawei. The United States restricts imports of Huawei products and also has export controls that prevent technology from being shipped or licensed to Chinese tech companies.
TSMC’s challenges could create opportunities for Intel in the fab space. On the other hand, Intel is not immune to the challenges posed by the deteriorating relationship between the United States and China. Earlier this year, Chinese regulators banned the use of Intel processors in government computers, but that could pose further challenges.
Intel is scheduled to announce its third quarter financial results after the market closes on October 31st, and this report is expected to be an important report for the company. Semiconductor companies’ second-quarter reports released sales, profits, and forecasts that were lower than market expectations. Management also announced major restructuring plans.
There’s a good chance Intel will share important details about its strategy, and its plans for manufacturing operations will be revealed in detail. The company will receive $8.5 billion in direct funding and an additional $11 billion in loans through CHIPS and the Science Act, making Intel the centerpiece of the U.S. plan to increase domestic chip manufacturing capacity. However, segment-specific issues and challenges facing the company as a whole have called into question the health and viability of the fab business. Investors will get a closer look at Intel’s Fab strategy this Thursday.
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Keith Noonan has no position in any stocks mentioned. The Motley Fool owns a position in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: November 2024 $24 short calls on Intel. The Motley Fool has a disclosure policy.
Why Intel Stock Is Profiting Today was originally published by The Motley Fool
