Intel (INTC +11.06%) stock soared 10.8% through 11:30 a.m. ET Wednesday after DigiTimes Asia, in an "exclusive" report, broke a story that Nvidia (NVDA +1.67%) and Apple (AAPL 0.56%) are planning to shift at least some of their contract semiconductor manufacturing work away from Taiwan Semiconductor Manufacturing Company (TSM +1.17%) and use Intel foundries instead.
Intel shareholders seem to think this is huge news. Are they right?
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Why would Nvidia and Apple do that?
"Chip customers now face mounting pressure to diversify supply chains due to cost and capacity constraints," opines DigiTimes. So while both companies fully intend to stick with TSMC as their "core" contract chip manufacturer, they're also contemplating using Intel for production of "low volume, low-tier, non-core" chips.
In Apple's case, this might include entry-level M-series processors for MacBook.
Nvidia has already invested $5 billion in Intel stock, a seemingly strange move for an Intel competitor, but less strange if Nvidia wants to keep Intel's foundry division alive to compete with TSMC on price. According to DigiTimes, Nvidia will hire Intel to do work on the successor to its Rubin series chips, dubbed "Feynman GPU." Intel might get as much as 25% of the chip packaging work on Feynmann, for example, with TSMC doing the remaining 75%.
NASDAQ: INTC
Key Data Points
Is Intel stock a buy?
While the news would be meaningful, is it really enough to make Intel stock a buy? I'm not sure it is.
Intel stock remains unprofitable at last report, still burning cash, and neither of those things will change before 2027, according to analysts polled by S&P Global Market Intelligence. Even collaborations with Nvidia and/or Apple probably won't help with that; according to DigiTimes, "meaningful" cooperation between Nvidia and Intel on Feynmann wouldn't begin before 2028.
Intel remains a sell for me.
