Intel to Stay Mostly Inside -- Heard on the Street
January 21 2021 - 7:42PM
Dow Jones News
By Dan Gallagher
Even Pat Gelsinger can only do so much in a week.
The former Intel Corp. engineer was named chief executive of the
chip-making titan last week. Wall Street roundly cheered the move,
believing that a leader with strong technical chops was needed to
help Intel finally solve its long-running manufacturing problems.
But the announcement came just a week before the company's
fourth-quarter earnings report, in which the company had promised
to announce whether it would outsource manufacturing of more future
chip designs, likely to rival Taiwan Semiconductor
Manufacturing.
Mr. Gelsinger won't officially start until Feb. 15, but he came
on Thursday's conference call with analysts to give a hint of this
thinking. He said he was pleased with the progress the company has
made on its 7-nanometer manufacturing process under development. He
said he was confident that the majority of Intel's 2023 products
would be made internally, though also that it was likely that Intel
would expand its use of outside manufacturing "for certain
technologies and products."
In other words, no radical changes seem to be in the offing.
That is unsurprising, given Intel's long history in chip making and
the significant challenges that would come from trying to pursue a
"fabless" business model. But these vague pronouncements will leave
investors guessing for a while more. Intel's share price jumped
more than 6% in the final minutes of trading Thursday, as its
earnings report slipped out early. But the stock gave up nearly 5%
in after-hours trading following the call.
The leadership change also prevented Intel from giving a
forecast for the new year, which it typically has in its
fourth-quarter report. The company's results from the fourth
quarter -- and its projection for the first quarter -- show the
strong benefits of a booming market for PCs, along with continued
weakness on the data center side. Intel promised a fuller outlook
for the year and more details about its manufacturing strategy once
Mr. Gelsinger has had more time on the job. He won't be able to
spend much of it in the break room.
Write to Dan Gallagher at dan.gallagher@wsj.com
(END) Dow Jones Newswires
January 21, 2021 19:27 ET (00:27 GMT)
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