Intel: the stock market is banking on Trump’s move and is hoping for a turnaround in the financial results

A market in a holding pattern. This, in a nutshell, sums up investors’ attitude towards Intel. This is borne out by the share’s performance on the stock market. ‘Firstly, it must be emphasised,’ explain some chart analysts at *Il Sole 24 Ore*, ‘that the shares are following a long-term downtrend. The dynamic resistance level – running from the double top around $69 in 2021 to the lower high at the end of December 2023 (around $51) – is currently around the $41 mark.” However, today the share price is hovering at around $20. In other words: a much lower level which, precisely, ‘signals a downward trend’.

That said, however, ‘for just over a year, the shares have been trading sideways. A range with a ceiling of $27 and a floor in the $18 region’. Usually, in such situations, statistics suggest that the breakout “from this period of consolidation will be downwards. If that were to happen,” the independent analysts explain, “the level to watch would be the $12–$13 range”. Beyond the statistics, however – and the fact that, in such a context, the DIY investor must exercise the utmost caution, assessing their own risk appetite – it is clear that the market is in ‘standby’ mode. This is a perfectly understandable situation. Investors want to understand whether, following the false start linked to former CEO Pat Gelsinger, the restructuring of the former US chip giant is actually taking shape. Or not.

In light of this, and to better understand the context, it is worth recalling the company’s corporate purpose. The multinational is an integrated chip manufacturer. In other words, it carries out a large part of the three main stages of semiconductor production: the design of the microprocessor architecture; its manufacture on the wafer; and assembly (in plastic or ceramic casings) and testing. Historically, all the steps described were carried out using solutions owned by Intel itself. Now, one of the key priorities of the previous CEO – who was also tasked with reviving the company and was dismissed at the end of 2024 because he was deemed not up to the job – was that, on the one hand, the group’s foundries should become increasingly open to contract manufacturing for third parties; and that, on the other hand – also with a view to pursuing this objective – the group should make significant investments in its production infrastructure. It is precisely these massive outlays that have proved – at least in the eyes of experts and the market – to be misguided. In particular, the return on investment was deemed insufficient. Hence the negative reaction on the stock market which – combined with unsatisfactory quarterly results – led to Gelsinger’s departure and the arrival, last March, of a new chief executive: Li-Bu Tan.

This new beginning has been characterised by several factors. First and foremost is the review of the Foundry division’s programme. Tan has a clear vision: to expand production capacity only if and when necessary. Consequently, Intel has put new plants planned for Magdeburg (Germany) and Poland on hold, whilst also slowing the pace of expansion at its mega-site in Ohio. In other words, the group is realigning its investments with actual demand. But that’s not all. Assembly and testing operations in Costa Rica will be consolidated into the larger factories in Malaysia and Vietnam. All this is aimed at reducing costs and eliminating duplication.

The rationalisation, however, is not limited to the expansion of factories. The new strategy – in order not to spread resources too thinly across too many fronts – maintains the focus on the Intel 18a project and aims to approach the 14A with greater caution. What does this involve? Generally speaking, the semiconductor industry is focused on the continuous miniaturisation of chips. This is a field in which the nanometre (one billionth of a metre) is used as a unit of measurement, typically referring to the size of the transistor gate. The smaller this becomes, the more transistors can be packed onto the chip, thereby increasing its computing power.