Intel Corporation (NASDAQ: INTC) is still struggling to produce its next-generation chips containing 7-nanometer transistors, and Intel investors are likely losing patience with the company.
Billionaire entrepreneur Mark Cuban said on Sunday that Intel’s problems could have much larger implications for the U.S. military.
Last week, Intel said the company may have to outsource at least some of its 7nm chip production to third-party companies after once again delaying the release of the high-performance chips.
Intel has already lost market share to competitors such as Advanced Micro Devices, Inc. (NASDAQ: AMD) due to 7nm production delays, and Intel said on the company’s earnings call that it has identified a problem with its 7nm production process.
Cuban Reacts: On Twitter, Cuban said Intel’s decision to outsource chip production could have major implications for the U.S. military.
“If Intel outsources manufacturing, the lack of domestic chip mfg could be the greatest threat to our technological and military future,” he wrote.
Cuban said advanced chips are at the heart of today’s cutting-edge technology.
“We can not control our own destiny if we don't build here...If we want to protect our future, we need to make investments in manufacturing of chips and all advanced technologies a national priority or we will find ourselves on the outside looking in, wondering why we are no longer a global economic and military super power,” Cuban said.
Benzinga’s Take: Following the news, Intel shares plummeted 16% Friday, while AMD shares jumped 17% and semiconductor foundry Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) gained 10%.
Until Intel gets its 7nm production on track, investors can expect AMD to continue to gain market share and third-party producers like Taiwan Semiconductor to benefit from potentially massive demand from Intel.
Given the national security concerns referenced by Cuban, expect U.S. government pressure on Intel to revert back to full in-house production as soon as possible.
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