Finance
Why Intel Shares Soared Today
Shares of Intel (NASDAQ: INTC) profit in Monday’s trading. The company’s share price ended the day up 3.1%, according to data from S&P global market information.
While there were no company-specific developments impacting Intel today, the stock did get a boost from news that another US semiconductor company received significant government subsidies. Texas instruments issued a press release announcing that it would receive $1.6 billion in new funding through the CHIPS Act to develop semiconductor fabs in Texas and Utah.
The company also said it expects to receive between $6 billion and $8 billion in tax benefits.
The US continues to focus on domestic chip production
Intel shares have been hit hard lately due to poor business performance and uncertainty on the horizon. The company’s share price is down 57% year to date and investors have been looking for positive developments that could help fuel a recovery in semiconductor stocks.
With today’s news that Texas Instruments would receive a new investment grant as part of the CHIPS and Science Act, investors saw signs that the US government will continue to support the development of its domestic chip industry.
The funding for Texas Instruments in particular indicates that the US is still focused on building domestic chip manufacturing capabilities. The types of semiconductors that Texas Instruments produces are much less advanced than the types made by major leaders Taiwanese semiconductor manufacturing, Samsungand Intel, but the significant new funding through the CHIPS Act shows the country is taking a diversified approach to financing the industry.
Can big business drive a recovery for Intel?
Although many companies design their own chips, most semiconductor manufacturing is done by only a handful of companies. TSMC in particular dominates the contract chip manufacturing market, and its leadership is even clearer when it comes to advanced semiconductors used for artificial intelligence and other advanced applications.
As a result, Taiwan is currently the epicenter of global chip production. But investors and analysts are concerned that China could invade the country or otherwise exert greater control over it.
Of the $39 billion allocated through the CHIPS Act to boost domestic chip production, Intel has been by far the largest recipient, with $8.5 billion in financing and additional loans.
The company is still undergoing a massive restructuring and will lay off 15% of its global workforce. Offering third-party manufacturing services could ultimately be a key performance driver for Intel, but the company still has a lot to prove – and it will take years for the fruits of this strategy to pay off.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Taiwan Semiconductor Manufacturing and Texas Instruments. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls to Intel and short August 2024 $35 calls to Intel. The Motley Fool has one disclosure policy.
Why Intel Shares Soared Today was originally published by The Motley Fool
