The pandemic has powered big gains in big technology companies, but not the biggest semiconductor maker. Shares of Intel have rallied only about half as much as the NASDAQ off their COVID-19 lows a year ago. The stock’s 2020 performance was much worse than the tech index overall.
Shareholders expect to hear more from the company on Tuesday when new CEO Pat Gelsinger holds a public webcast. He has promised “a business update” and “the new era of innovation and leadership.”
A news release from the company announcing the event is light on details. The new boss worked at Intel for 30 years before leaving for c-suite jobs at other tech firms, and then returning six weeks ago. He takes over a semiconductor giant and technology industry founding firm that has been facing manufacturing problems, stiff competition and opportunity misfires.
Intel’s long-time business model has been to make its own semiconductors. This has given the company scale, but it’s also costly. It takes billions of dollars to stay competitive with Asia-based chip makers. An activist shareholder has been pushing Intel to explore splitting its chip design work from its chip making operations.
When Gelsinger was hired, he didn’t rule out using contract manufacturers to make Intel chips, but he pledged that the company would make most of its own products. “We’re interested in resuming (the company’s) position as the unquestioned leader in process technology,” he said at the time.
Tuesday’s presentation will be his first public step toward how he plans to fulfill that ambition.
The laptop and desktop computer market remains Intel’s most important by revenue, but that’s not high-growth areas like data centers and the Internet of Things (think smart refrigerators or stop lights). These are two areas Intel has concentrated on growing but has come up short.
Intel’s stock only recently has come alive with buyers expecting the chip giant to regain its footing. They will be looking for evidence in the week ahead.