Intel is too late targeting the contract services market, experts say

Intel shares have appreciated 8% since the beginning of this year, with the main growth period from mid-February to late May, when new CEO Patrick Gelsinger made keynote statements about the future strategy of the processor giant. Not all analysts share his optimism about the advisability of entering the contract services market.

Image source: Extremetech

Image source: ExtremeTech

Recall that Intel has already allocated $ 20 billion to expand its production facilities in Arizona, and by the end of the year should decide on the site of construction of an enterprise in Europe, which will serve third-party companies. Already, the company has allocated part of its production capacity in Ireland for the production of components for the automotive industry, which remain in great deficit. For European customers who take a conservative approach to their lithographic technology choices, Intel is pushing for a bold move towards cutting edge technology standards.

Analysts at Bank of America Securities think Intel’s decision to enter the contract services market is not only belated, but also carries serious financial risks. This initiative will divert too many resources to itself, and it is still hardly possible to guarantee an adequate financial return. A lot will be cleared up on Nov. 18 when the company is holding an analyst event detailing its strategy in this area.

In addition, Bank of America Securities reproaches Intel for remaining highly dependent on the maturing PC market. This and previous years, with their high demand, should rather be considered an anomaly, and in general, Intel does not have many opportunities to expand its business in this segment. On the contrary, AMD demonstrates the ability to crowd out its main competitor, and processors with Arm architecture are ready to prove themselves not only in the consumer, but also in the server segment.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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