Ego Chip

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What's going on?

Intel unveiled a whole new strategy and a $20 billion investment plan late on Tuesday, which its confident will help it regain the coveted title of worlds biggest chipmaker.

What does this mean?

Intels gone a little off track in the last few years: its manufacturing has slipped behind schedule, its lost its grip on the market, and some unimpressed investors even started pushing the company to sell off its chip production altogether to focus on designing them.



Now, though, its back with a new CEO and a new grand plan. Intel hasnt just not ditched manufacturing, its actually doubled down on it: the company announced itll be investing $20 billion in two new factories, and launching a new unit that makes chips for other companies too. As for those pesky manufacturing delays, itll outsource what it needs to in order to stay competitive, but it still thinks it can manage the lions share itself.

Why should I care?

For markets: Intels gain might be TSMCs pain.


Rival TSMCs neck might be sore from whiplash: one moment the worlds biggest contract chip manufacturer thinks its about to pick up business from Intel, and the next its facing even stiffer competition from the American chipmaker especially now Intels making chips for other companies. Still, that sore neck should go well with its sore tush: TSMCs shares dropped 3% when investors heard the news.



The bigger picture: The real winners are upstream.


Theres a global shortage of chips right now, which Intel reckons could last for the next couple of years. That could spell bad news for carmakers that have had to halt operations until theyre all chipped up a delay that could lose the auto industry $61 billion in sales this year. Still, at least those that build chipmaking equipment are bound to have good days ahead, which might be why shares of chip-quipment supplier ASML jumped 6% after Intels announcement.

Originally posted as part of the Finimize daily email.

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