Bernstein’s main conclusion from Intel’s foundry segmentation event was that there’s “no compelling reason to participate until 2030.”
“Considering that foundry economics have been poor shouldn’t come as a significant shock; in fact, the company hinted at this directly back in June,” analysts stated.
Nevertheless, the notion that conditions are deteriorating further in 2024 might have been received unfavorably; if anything, the concept that a -37% operating margin and a $7 billion loss do not yet signify a low point is rather astonishing, especially considering all the cost reductions the company was purportedly implementing last year.
While Bernstein acknowledges the potential for enhancement in Intel’s foundry business, pointing to last year’s substantial losses and the company’s aim for a 25-30% operating margin by 2030, they strongly advise exercising caution.
Analysts cautioned that INTC may face a lengthy journey, even for those fully committed to the seemingly ambitious objectives. Attaining a break-even point might not be feasible until after 2027, and the ambitious targets for 2030 are viewed as speculative, heavily reliant on achieving optimal progress—a topic still widely discussed.
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