This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Intel Snags $2 Billion From SoftBank. What Now?
- Intel just announced that SoftBank has agreed to buy $2 billion worth of Intel stock, details here.
- The shares are likely newly issued, meaning dilution of existing shareholders. Markets didn’t care and shares rose >5% in after hours trading.
- $2 billion is a far cry from the $40 billion former CEO Craig Barrett thinks Intel needs. Could this be the first of similar deals with US semiconductor/technology companies?
2. CHIPS Act Money For Equity Stake, Pay For China Play? For Goodness Sake!
- US commerce secretary Howard Lutnick confirmed that the US Administration is pursuing a strategy of converting CHIPS Act funding into equity stakes with Intel acting as its guinea pig
- It seems clear that Mr. Lutnick is bent on applying the same formula with other beneficiaries of US CHIPs Act funding
- CHIPs Act Dollars for Equity, Pay For China Play may seem like innovative ideas but in reality they are a slippery slope to confusion & chaos. Who or what’s next?
3. Intel (INTC.US): SoftBank Buys $2bn of Intel Stock at $23; U.S. Government Considers Investment.
- Monetary support may temporarily ease Intel’s current financial difficulties, but the ultimate solution lies in securing technical support from manufacturing.
- We remain curious how the U.S. government will devise a solution for Intel if the company ultimately cannot provide the necessary support for U.S. Fabless players.
- We are bearish on Intel Corp (INTC US)’s current position and do not believe financial support alone can help the company overcome its challenges.
4. SUMCO Q225. Operating Profit Tanks As Depreciation Soars
- SUMCO reported Q225 revenues of ¥102.9 billion, flat sequentially and roughly 3% higher than guidance.
- Operating profit of ¥1.5 billion was also slightly better than the forecasted breakeven, but dramatically down from its peak of ¥30.2 billion in Q322.
- A projected further increase in depreciation charges for the current quarter is forecasted to drive operating profit to negative ¥3.5 billion. Yikes!
5. TSMC (2330.TT; TSM.US): 2nm Production Schedule in US Could Be One Year Ahead of Previous Schedule.
- TSMC Chairman C.C. Wei previously emphasized that customer demand for 2nm technology surpasses that for 3nm, and the company is actively working to expand production capacity.
- For 2nm technology, we expect production to take place at the Tainan fab, ahead of the U.S. Arizona fab and earlier than the previously anticipated 2028 timeline.
- Taiwan Semiconductor (TSMC) – ADR (TSM US)’s next generation 2nm development is actively progressing.
6. Intel’s Historic Agreement Or Moment Of Surrender?
- Intel has agreed to convert US CHIPs Act funding (past & future) & Secure Enclave contracts into a 10% equity stake for the US Administration.
- The equity stake will comprise 433.3 million primary shares of Intel common stock at a price of $20.47 per share, a roughly 16% discount to their market value yesterday
- In his commentary on the deal, President Trump referred to Intel CEO Lip-Bu Tan as a victim, stating he came to the White House to save his job. Wow!
7. A Defining Bet: Intel’s New Capital and the Case for Buying a Stake in Taiwan’s UMC
- A major Intel balance sheet boost, backed by SoftBank, the U.S. government, and leading institutions, would enhance the company’s capacity to make bold bets on regaining global chip manufacturing leadership.
- UMC’s market valuation is less than the capex for just one advanced fab. Intel would likely make a gain on its investment since it would cause UMC shares to rally.
- For less than the cost of a single advanced fab, a large company could acquire UMC and gain chipmaking expertise approaching TSMC’s level; boosting returns across an entire fab network.
8. Taiwan Tech Weekly: TSMC’s US Fabs On a Roll; Why Intel Should Invest in UMC; The Big SPE Reset
- TSMC’s Tale of Two Fabs: Arizona’s Surprise Upside vs. Kumamoto’s Challenges
- A Defining Bet: Intel’s New Capital and the Case for Buying a Stake in Taiwan’s UMC
- SPE – Semi Production Equipment: The Big Reset Is Happening. SPE Firms Expectations Is the Problem
