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How a decision 15 years ago contributed to Intel’s fall from grace today

South China Morning Post, 22 August, 2020

By Michael Bruck

  • Investors sold Intel’s stock and it lost around US$50 billion in valuation, while TSMC saw its market valuation increase by over 50 per cent in the same period
  • Apple’s decision to use ARM instead of Intel gave TSMC the learning curve advantage which over time enabled it to pull ahead in manufacturing process technology

Last month, Intel announced its second-quarter financial results, handily beating analysts’ consensus expectations by a handsome margin. Still, investors sold the stock and the company lost around US$50 billion in valuation. Meanwhile, its rival in advanced process technology, TSMC, saw its market valuation increase by over 50 per cent over the same period.

Most investment bank analysts covering this sector downgraded Intel to a “sell” and upgraded TSMC and Intel’s US-based rival AMD to a “buy”. The reason they gave for the downgrade was that in Intel’s quarterly announcement, the company’s CEO revealed an additional six-month delay in Intel’s transition to 7nm (nanometre) manufacturing process technology.

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