) is looking to establish itself in the foundry business, which is
relatively new for the company. One recent development in this
regard is that Intel is angling for Apple's business (
), which is looking for alternatives to Samsung. Below we take a
quick look at how this could play out. Intel competes with Advanced
Micro Devices (
) and Nvidia (
) in the microprocessor and graphics businesses.
Our price estimate for Intel stands at $28.68
, a roughly 25% premium to market price.
Intel's Opportunity, But a Word of Caution
Intel is competing with Samsung and TSMC to get a contract for
manufacturing some of Apple's chips. Intel will look to take
advantage of deteriorating relationship between Apple and Samsung
as Apple recently filed a lawsuit against Samsung accusing the
company of violating its intellectual property regarding its
smartphones and tablets.
Though Intel supplies foundry to existing customers, Apple's
demand would help provide the scale for it to build out this
business. Apple's move away Samsung would take a fair amount of
time, and for the time being would be a small portion for Intel,
which we could include in the 'other businesses' segment that Intel
Interestingly Intel acknowledges that there is overcapacity in
the foundry business and so this could make it difficult for it to
reduce the '
net losses from other products
' where we would classify this business in the near-term. Either
Intel hopes to achieve scale and enough orders to make this
business worthwhile or it sees strategic opportunity in thwarting
business away from large suppliers like Samsung and TSMC.
See our complete analysis for Intel's stock