Intel (INTC) stock traded at $117 at 10:48 a.m. EDT on Monday, October 5, down 1.9% after falling about 4% before the open.
Elon Musk confirmed over the weekend that TSMC is in talks to join Terafab, his chipmaking project, where Intel is already a partner. “Just discussions, but something may come of it,” Musk wrote on X. No agreement has been reached.
Intel’s seat at Terafab just got company
Intel joined Terafab in April, and its next-generation 14A process is the only manufacturing process named for the project so far. Shares of Taiwan Semiconductor (TSM) rose 3% in Taipei on Monday after Musk’s post, Reuters reported. TSMC has already committed $265 billion to Arizona and is weighing a Texas investment, two sources told Reuters on September 30.
On Monday morning, Susquehanna estimated Intel’s share of laptop CPU models fell 3.9 percentage points quarter over quarter to 68.1%, while Advanced Micro Devices (AMD) gained ground.
Why one customer matters this much
Intel Foundry booked $5.8 billion in second-quarter revenue. Only $293 million of it came from outside customers, about 5%. The rest is Intel making its own chips. Terafab was the highest-profile outside name attached to 14A.
INTC valuation model: what the turnaround has to deliver
I ran a mid case with revenue growing 19.0% a year, a net income margin of 32.8%, EPS growth of 39.0% a year, and the P/E easing 2.8% a year. Over the last year, revenue shrank 0.5% and the net margin was negative 1.1%.
That is a complete reversal. I didn’t trim it because CEO Lip-Bu Tan said on the Q2 earnings call that 14A “defect density and transistor performance are all outpacing 18A development,” and Intel committed to a high-volume 14A ramp in 2028.
The model lands at $461 by December 31, 2030. That is a 286.1% total return from the $119.33 close over 4.2 years, or 37.4% a year, close to four times the starting price.
Reaching that 32.8% net margin would require a major profitability turnaround, including improvement at Intel Foundry, which posted a $2.1 billion operating loss in Q2. External revenue is one measure to watch, starting from $293 million, although its year-over-year increase primarily reflected Altera becoming an external customer after its deconsolidation.
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