Intel (INTC) got its second upgrade this week on Thursday as Citi (C) analysts raised their rating on the stock to Neutral from Sell.
Analyst Atif Malik said that supply tightness in TSMC’s (TSM) packaging business would be a tailwind for the US chipmaker.
Packaging refers to when a finished chip is wired up and placed into a protective shell so it can be used in computers and electronics. Intel’s advanced packaging business has recently attracted interest from Big Tech hyperscalers for their custom AI chips, KeyBanc analyst John Vinh said this week in his own note upgrading Intel shares.
Citi’s Malik also said he believes Intel will get front-end foundry customers as yields on its 18A-P and 14A manufacturing processes improve. In other words, he thinks companies will eventually, actually pay Intel to manufacture their chips rather than just package them, which is far more lucrative.
Meanwhile, Intel got a nod from its revered competitor, TSMC, which leads the chip manufacturing industry and produces leading edge chips for Nvidia.
Asked whether the US government investment in Intel and the chipmaker’s partnership with Nvidia was a competitive concern for TSMC, CEO C.C. Wei said he wasn’t worried during a call with analysts early Thursday morning.
But, he said: “We have a competitor — no doubt about it — that’s a formidable competitor.”
“But first, it takes time; two, we don’t underestimate their progress.”
Such acknowledgement from industry leader TSMC indicates how far Intel’s struggling manufacturing business has come, as the company’s turnaround is still questioned by many on Wall Street. The stock rose fractionally Thursday and is up 154% over the past year.