Investors, for the most part, haven’t shown a great deal of appreciation for the recent news coming out of Intel, including its recent investor day. Not only did Intel say that its forthcoming server chip would be delayed another year to 2024, but it would be investing heavily in big capital foundry projects, forgoing cash flow for three years and allowing revenue and profit margins to shrink.
For Wall Street analysts and shareholders, Intel’s recovery plan seems potentially long and risky, based on the vision of new CEO Pat Gelsinger. It will take years for Intel to ramp up its new domestic foundry business making chips to sell to designers like Apple and Qualcomm, wrote Morningstar analyst Abhinav Davuluri in a report.
But Intel, and Gelsinger specifically, have one powerful friend: President Joe Biden. In his State of the Union Address on Tuesday evening, Biden called out Gelsinger, who was in attendance, and Intel’s $20 billion investment in new chip manufacturing in Ohio.
“If you travel 20 miles east of Columbus, Ohio, you’ll find 1,000 empty acres of land. It won’t look like much, but if you stop and look closely, you’ll see a ‘Field of dreams,’ the ground on which America’s future will be built. This is where Intel, the American company that helped build Silicon Valley, is going to build its $20 billion semiconductor ‘mega site’.”
Biden noted that Intel’s CEO, Pat Gelsinger, “told me they are ready to increase their investment from $20 billion to $100 billion. That would be one of the biggest investments in manufacturing in American history.”
But that is contingent on Congress passing a roughly $50 billion innovation act, which went through the Senate last summer but has not passed in the House.
