Analyst: Intel's foundry business may be profitable after 2025

According to Jiwei.com, Intel's stock price fell 7% on Friday local time because Wall Street analysts believe that Intel will invest tens of billions of dollars to develop its wafer foundry business. Whether it can narrow the gap with its competitors as soon as possible has become an unknown, and the company's wafer foundry business may not be profitable until after 2025.

Reuters reported that Intel has been struggling to develop new processes in recent years, which has caused it to lag behind rivals AMD and Nvidia in the race to make smaller and faster chips.

It is reported that Patrick Gelsinger returned to Intel as CEO this year. He has announced plans to invest US$20 billion to build two semiconductor factories, which will provide foundry services to other chip companies.

Ianjit Bhatti, an analyst at Atlantic Equities, said: "For Intel to succeed in foundry, it must invest in solving a lot of major problems in advance, and it may not be profitable until after 2025. In the short term (2-3) years, we don't think Intel can cope with AMD's market share growth."

On Thursday, Intel released its first quarter financial report for fiscal year 2021 ending March 27, with profits lower than analysts' expectations. Intel Chief Financial Officer George Davis told Reuters that the profit decline was because the company was investing in 10nm and 7nm processes.

Separately, Patrick Gelsinger also announced plans to produce chips for automakers to help alleviate the global chip shortage affecting the automotive industry.

Samuel Indyk, senior analyst at uk.Investing.com, said: "The chip shortage will require massive spending for manufacturers. This expenditure is difficult for Intel to bear as it tries to regain the title of the most valuable chip maker in the United States."

Currently, Wall Street analysts are mostly on the sidelines. Twenty-six of the 40 analysts covering the stock have a "hold" rating or lower, while another fourteen analysts rate the stock "buy" or higher. The median price target for Intel stock is currently $65, according to Refinitiv data.