Intel's Lead is going to become bigger in the next 3 years
Intel has bought a substantial equity stake in the largest semiconductor equipment maker ASML. Note ASML is only one out of the 3 companies that can make advanced lithography machines for the semiconductor fabs. It has a sizable technology lead over competitors like Nikon and Canon in making this very expensive equipment. Intel has invested money in ASML to accelerate technology advancement and further its lead over competitors. Intel is also spending $2 billion to build the first 450 mm fab in the world. These new fabs will use 450 mm wafers instead of 300 mm wafers. The 450 mm wafers will dramatically decrease the overall cost, as the new wafers will produce almost 2x more chips for the same cost.
EUV will be the future. ASML is buying CYMER. These will be $$MM machines. INTEL should gear up its engineering staff to deal with the new EUV technology. We are talking about sub nano and 450mm wafers.
As far as I know only ONE beta EUV system is in a fab in the Netherlands.
I think that Intel has one of the strongest competitive barriers in the technology industry due to its lead in both semiconductor technology and manufacturing. The company is spending its huge cash flow on building for the future, unlike some companies, which simply hoard cash. While Wall Street likes short-term profit and low capex, I think Intel is being smart by spending its idle cash in increasing its lead in the semi industry. Intel has one of the lowest cash levels amongst mega cap technology companies as it spends nearly all of its cash flow in either capex or dividends/buybacks. Intel remains one of my favorite technology picks due its low valuation and strong competitive barriers.
Intel Fab Utilization is low currently but will fill it up fast
One of the criticisms that Intel is facing is that its fabs are running at low utilization. The reason is that the PCs are declining at a faster pace than expected and Intel wants to keep a low inventory level. However, Intel is rapidly catching up with competitors in the mobile processors space. By the end of this year, Intel will introduce a new generation of mobile processor chips, which will compete with the best out there. It should also manage to integrate a communications chip in its mobile SOC products. This will give it a much greater market share of the rapidly growing smartphone and tablet chip market. This should fill up a large share of the fab capacity. Some commentators are also speculating that Intel might use its advanced fabs to produce leading edge NAND memory chips. Intel recently sold its interest in the IMFT JV to Micron Technology (MU). The company continues to have a close relationship with Micron and that possibility remains in play.