Please ensure Javascript is enabled for purposes of website accessibility

Dow Jones Gains as Intel Reportedly Places Order With TSMC, Walgreens CEO Resigns

By Timothy Green – Jul 27, 2020 at 12:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A report from Taiwan indicates that Intel is turning to a third-party foundry for some of its upcoming chips, and Walgreens is searching for a new CEO.

The Dow Jones Industrial Average (^DJI 1.90%) was up modestly by late Monday morning, having gained 0.21% at 11:45 a.m. EDT. Senate Republicans are expected to unveil a new $1 trillion stimulus plan on Monday that will reportedly include a reduced supplemental unemployment benefit and a second round of direct payments to many Americans.

Working against the Dow on Monday were Intel (INTC 0.54%) and Walgreens Boots Alliance (WBA 1.92%). Intel has reportedly placed a large order with third-party foundry Taiwan Semiconductor Manufacturing, marking a potential sea change in the semiconductor industry. Meanwhile, Walgreens has announced that its CEO has decided to step down.

A computer motherboard.

Image source: Getty Images.

Intel reportedly places order with TSMC

Chip giant Intel disappointed investors last week when it disclosed in its second-quarter earnings report that chips based on its 7nm manufacturing process were behind schedule. The company has struggled for years getting its 10nm process ready for mass production -- Intel is still launching mainstream PC chips built on its 14nm process.

During the earnings call, Intel CEO Bob Swan dropped a bombshell: The company was considering outsourcing manufacturing to third-party foundries if it made sense to do so. "As an example, our data center GPU design, Ponte Vecchio, will now be released in late 2021 or early 2022, utilizing external and internal process technologies, combined with our world-leading packaging technologies," Swan said.

On Monday, Taiwan-based newspaper Commercial Times reported that Intel had placed a massive order with TSMC for 6nm chips. The order is reportedly for 180,000 wafers, roughly the same size order as that placed by rival Advanced Micro Devices. TSMC's leading-edge capacity is now reportedly fully booked for the first half of 2021.

Intel is unlikely to give up on in-house manufacturing entirely, like AMD did in 2009 when it spun off its manufacturing business as GlobalFoundries. But given the chronic problems Intel has had with its process technology, outsourcing at least some production would allow it to keep pace with its rivals.

Shares of Intel were down about 0.4% by late Monday morning, while TSMC stock was up more than 10%.

Walgreens CEO steps down

Walgreens has been hit hard by the COVID-19 pandemic. In the fiscal third quarter, which ended in May, the drugstore chain reported an operating loss of $1.6 billion. That loss was driven by weak sales, a shift toward lower-margin products, and a large write-off related to the U.K. business.

On Monday, the company announced a leadership shake-up. Stefano Pessina has informed the board of directors that he will be stepping down as CEO. Once the board decides on a new CEO, Pessina will take over as executive chairman.

This move comes after years of underperformance for the stock. Even before the pandemic, shares of Walgreens were trending lower. Since peaking in 2015, Walgreens stock is down about 60%. So far this year, the stock has shed roughly 33%.

News of the CEO's resignation was not well received by the stock market, with shares of Walgreens down about 2.1% by late Monday morning.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
$27.04 (0.54%) $0.14
Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
$33.05 (1.92%) $0.62
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$29,689.65 (1.90%) $555.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.