Why Did Intel Stock Drop Today?

Intel keeps shifting plans, and investors are nervous

ET Wednesday after Reuters reported a shift in the company's foundry plan

Intel may be preparing to cease marketing its "18A" chipmaking cess (which is to say, making 1. 8-nanometer semiconductor chips) to outside customers, and write off its investment in that cess

Instead, Intel would focus on more advanced 14A cess (1. 4 nm) for its foundry customers, while continuing to develop 1. 8-nm chips in-house

Image source: Getty Images

Bad news or good news

New CEO Lip-Bu Tan has ed that customers seem less than enthusiastic over Intel's 18A chips -- which is kind of a disappointment after Intel invested "billions of dollars" in the cess

Industry experts are predicting the change in focus will cost Intel "hundreds of millions, if not billions, of dollars" in write-offs

However, if Intel can keep making 1. 8-nm chips on its own, the write-downs may be less fierce

Intel may not have yet made a final decision to change tack, reserving that for a board meeting later this month

In the meantime, Intel is declining to on "hypothetical scenarios or market speculation. " Is Intel stock a sell

Intel reported its first generally accepted accounting principles (GAAP) net loss in nearly 40 years last year

Analysts forecast the company will lose money (but less money) this year, and next year as well, before returning to fitability

The company is betting big on 18A and 14A to catch up to rival chipmakers such as Taiwan Semiconductor, but as today's news shows, it's not an easy task

But until it's ven it can be a giant, fitable company again, I can't recommend buying the stock

Rich Smith has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Intel and Taiwan Semiconductor Manufacturing

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