Despite investments worth $5 billion,
) shelved the opening of its chip plant Fab 42 in Arizona, which
was once cited by President Obama as an example of U.S.
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This crucial decision came in the wake of a slump in demand for
PC microprocessors, which happen to be the main source of
revenues for Intel. As per research reports, global PC shipments
fell by approximately 10% in 2013.
Intel is one of the world's top chip manufacturers, but of late
it has been hit hard by the slowdown in demand for PCs. Despite
its endeavors to become a top supplier for smartphones and
tablets, which have been gaining strength, Intel's success in
this regard has been limited.
Intel is not the only company to have suffered due to the PC
shipment decline. PC makers including companies like
), Dell Inc.,
) have also experienced a sharp decline in revenues. As per
reports, the main reason for the decline in PC sales is the
relatively higher cost of PCs, which is leading customers to opt
for smartphones and tablets.
In order to reduce the cost of production and thus increase
profitability, Intel and some of its competitors like Samsung
Electronics have decided to manufacture larger-sized wafers.
Intel had planned to equip the Arizona fab with machinery needed
to manufacture these large-sized wafers.
Reportedly, the majority of Intel's existing plants are operating
at less than 80% capacity, indicating that either demand remains
below expectations or that Intel is gearing up for significant
growth in the not-too-distant future. Since the company recently
recruited more than a 1,000 employees at the site, it's very
likely that the second theory is correct.
Currently, Intel has a Zacks Rank # 3 (Hold).