Intel To Set Up 2 Factories In Arizona; Shares jump 6.6% Post-Market
Intel has announced a major expansion in Arizona where the company will invest about $20 billion and set up 2 factories. Intel shares were up about 6.6% in Tuesday’s extended trading session.
The plants will enhance Intel’s (INTC) semiconductor manufacturing capacity and the company expects to start planning and construction activities in 2021. These plants will address increasing requirements for current products while also providing committed capacity for foundry customers.
Dr. Randhir Thakur, President of Intel Foundry Services said, “We are grateful for our partnerships with the State of Arizona and the Biden administration for creating a business environment that encourages investment in semiconductor innovation and helps make this new expansion possible. We are excited to continue our long tradition of innovating and investing in Arizona.”
Intel plans to become a key provider of foundry capacity in the U.S. and Europe and serve global customers. Intel CEO Pat Gelsinger also outlined the company’s ‘IDM 2.0’ strategy which banks on manufacturing, innovation and product leadership.
IDM 2.0 will combine the company’s internal factory network, third party capacity and new Intel foundry services in order to create long term shareholder value.
Gelsinger said, “IDM 2.0 is an elegant strategy that only Intel can deliver – and its a winning formula. We will use it to design the best products and manufacture them in the best way possible for every category we compete in.” (See Intel stock analysis on TipRanks)
On March 23, Barclays analyst Blayne Curtis reiterated a Sell rating on the stock and increased its price target to $58 from $53 (8.6% downside potential). Commenting on the IDM 2.0 update, Curtis “struggles to see how the stock still works” and the normalized earnings which are closer to $3.50 per share “make this value idea much more expensive for a declining story.”
Turning to rest of the Street, the stock has a Hold consensus rating alongside an average analyst price target of $64.31 based on 12 Buys, 12 Holds and 6 Sells. Shares have rallied 28% over the past year.
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