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Reuters
Shares of Taiwan Semiconductor fell on Wednesday after Intel announced plans to spend $ 20 billion on two new chip factories in Arizona.
Intel’s new CEO, Pat Gelsinger, set out plans to compete directly with Taiwan Semiconductor and its South Korean rival Samsung in the foundry business by creating chips for companies around the world.
“Intel is back. The old Intel is the new Intel,” Gelsinger said in a virtual presentation on March 23. “We are going to be market leaders and we are going to satisfy new foundry customers, because the world needs more semiconductors and we are going to step into that gap in a powerful and meaningful way.”
Intel is leveraging incentives from the federal and local governments to help roll out its new factories after President Biden signed an executive order to strengthen U.S. supply chains. February.
Intel’s factories in Arizona will create more than 3,000 permanent high-tech jobs, 3,000 construction jobs, and approximately 15,000 long-term local jobs for the region.
Shares of Taiwan Semiconductor continued their slide for more than a month on Wednesday after the Intel news broke. The stock is down roughly 20% from the all-time highs on February 16.
In a note to institutional investors Wednesday, Wedbush’s Brad Gastwirth said he believes TSMC’s drop on Intel news is overblown.
The chief technology strategist said he sees Intel’s new foundry business as a costly move that could have a “lengthened” production schedule, without generating revenue for Intel until 2022 or 2023.
Taiwan’s Economy Minister Wang Mei-hua added a similar opinion as he left parliament on Wednesday, saying that Intel’s $ 20 billion investment would not be a challenge for Taiwan Semiconductor and other Taiwanese chipmakers, Reuters reported. .
Taiwan Semiconductor has enough problems of its own without Intel getting into the foundry business.
Water shortages have threatened production at TSMC for more than a month, and Bloomberg reported Wednesday that water supplies to chipmakers have been cut off completely as drought continues to reduce the nation’s water supplies. islander.
Taiwan Semiconductor was trading down 4.13% as of 9:58 am ET on Wednesday.
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