Technology
Richard Windsor argues SoftBank’s $2bn investment in INTC, alongside a potential 10% US government stake, may keep the company alive but does little to resolve its strategic paralysis. INTC faces a stark choice: either invest heavily to catch up with TSMC or break up the business - yet under new CEO Mr. Tan, neither path is clear. The board abandoned Pat Gelsinger’s catch-up strategy due to mounting costs, leaving INTC exposed to further share losses in PCs (to AMD and Qualcomm) and in data centres (to Nvidia and AMD). Richard warns that without decisive strategy, customer confidence will erode, competitors will gain share with ease and capital injections alone cannot avert decline. He sees no attractive entry point in INTC shares.
Edition: 218
- 22 August, 2025
Technology
Richard Windsor says MediaTek’s Kompanio Ultra chip sets a new standard for the high end of the Chromebook market and looks to be merely a stone’s throw from Intel and Advanced Micro Devices facing another newcomer in the PC Market. The biggest winner will be Arm, which will see its penetration of PCs accelerate and it will earn higher royalties from MediaTek which buys the processor design and licences the IP. This is neutral for Qualcomm because competition in this space is healthy and will keep the firm on its toes and push it to continue to lead when it comes to performance. INTC and AMD are the real losers here as the x86 architecture looks increasingly obsolete.
Edition: 209
- 18 April, 2025
Technology
Forensic Alpha sees several new accounting red flags emerging, earning the stock a ‘high risk’ label. The two key areas of concern revolve around an accounting policy change (the point at which INTC can capitalise inventory on the balance sheet seems to have completely changed) and an increase in payables (from $8.6bn to $12.6bn, while other accrued liabilities have risen from $12.4bn to $14.3bn. Combined, these balances now amount to a massive $26.9bn, or 64% of net debt). They expect to see increasing scrutiny of the cash flow statement as restructuring efforts unfold in 2025.
Edition: 204
- 07 February, 2025
Technology
The “ouster” of Pat Gelsinger will almost certainly result in INTC being split up, meaning the once all-powerful brand may soon be just a memory. With the company’s future very uncertain and its once great engineering culture in poor shape, INTC is easy pickings for its resurgent competition. Richard Windsor expects to see Qualcomm, AMD and MediaTek redouble their efforts in PCs and the data centre. He has often said that at 10x earnings, one should shut one’s eyes and buy the stock, but because of the falling EPS estimate the valuation has never gotten there. With the company in this much trouble, there is no price at which he would want to buy it.
Edition: 201
- 13 December, 2024
Technology
Code red - INTC reported a truly awful set of numbers, declined to guide for 2023 and appears to be losing market share left, right and centre. Richard Windsor thinks there is a good chance that INTC will need more capital. He argues management should cut the dividend and sell its stake Mobileye (he believes INTC has 24 months to dispose of its stake before the share price collapses). INTC could post negative EPS this year meaning that there is very little to support the share price from a valuation perspective now.
Edition: 153
- 03 February, 2023
Technology
Inflection Point Research, LLC
NVDA's dominance in AI workloads, both in cloud computing infrastructure and other implementations, remains very much intact - Michael Fox believes the bevy of current start-ups will have a steep uphill climb to get any traction in high volume AI deployments (i.e. cloud), and while Advanced Micro Devices and Intel have competing solutions that look good on paper, both fall short in ecosystem and support. Ultimately, Michael expects the real competition for NVDA’s dominance will come from internal chip developments at the hyperscalers. Fortunately for NVDA, any true competition is years down the road.
Edition: 149
- 25 November, 2022
Technology
Poor results and weak guidance - this is more about execution than the economy. Instead of 2023 EPS being c.$3.75 (PER 9.6x), EPS is now likely to be $2.00 to $2.25. This (again) brings down the “shut your eyes and buy it” moment from $36 per share to $20. INTC is no longer a value stock as its earnings have evaporated and one must now look through to the recovery. Although this is far from certain as Richard Windsor still has concerns re. the longevity of the x86 processor design and INTC’s financial strength is weakening fast. Qualcomm, MediaTek, and TSMC remain far better places to be in the semiconductor sector at the moment.
Edition: 141
- 05 August, 2022
Technology
As companies adjust to a down economic cycle, topping the list of corporate priorities should be to contain costs / expenses and maintain a healthy FCF. INTC should be no exception. While cutbacks in opex are to be expected, KC Rajkumar believes there is low-hanging fruit in the cost domain for the CFO to rationalise. The option is not without risk, but hard times call for bold measures. KC thinks a viable case can be made for INTC to pull out of TSMC’s 3nm foundry service slated to start in 2023/24.
Edition: 138
- 24 June, 2022
Technology
CEO Patrick Gelsinger remains overly optimistic about INTC's growth prospects and long-term margin structure - Paragon Intel continues to be highly sceptical that INTC will benefit from a “sustainably” larger client base. They also argue that full year gross margin guidance of 52% (which implies an improvement in 2H22) is unrealistic given the ramping of newer process nodes typically come with lower yields. Ongoing share loss in DCAI and a potential sharp decline in PCs means double barrelled gross margin declines are inevitable.
Edition: 135
- 13 May, 2022
Intel (INTC)
Technology
New CEO Pat Gelsinger will fall short in his attempts to rejuvenate INTC’s innovation engine, prevent market share losses, and protect margins in the face of secular technological trends and unrelenting competitive intensity. Paragon’s short thesis also includes interviews with former colleagues and industry sources who worked with Gelsinger. He is characterised as an uncreative thinker and a weak team manager. Gelsinger’s ManagmentTrack Rating is 1.0 (proprietary score combining Performance and Integrity Rating; range is 0.1-9.9) - only 10 out of 3,468 executives have a lower rating across Paragon’s platform.
Edition: 114
- 09 July, 2021