Intel guidance, foundry comments 'clearly a positive,' but company still at risk: Citi
Leon Neal
While Intel (NASDAQ:INTC) CEO Pat Gelsinger's comments relating to its third-quarter guidance and a prepayment for its foundry business are "clearly a positive development," the Santa Clara, California-based chip giant is not out of the woods yet, investment firm Citi said.
"While this is clearly a positive development, we continue to believe Intel should exit the Foundry business where it has little chance of succeeding for a variety of reasons," analyst Christopher Danely said in reference to the prepayment by a customer for Intel's nascent foundry business.
Speaking at a Deutsche Bank technology conference on Thursday, Gelsinger said the prepayment from an unidentified customer is for Intel's (INTC) upcoming technology node, 18A, which is scheduled to go into production in the second-half of next year.
Earlier this year, Intel (INTC) CFO David Zinsner said he expects the company to announce a major foundry customer later this year as the semiconductor giant attempts to compete with the likes of Taiwan Semiconductor (TSM), GlobalFoundries (GFS) and Samsung (OTCPK:SSNLF) in chip manufacturing for other companies.
In addition, Danely said he's fearful that both Intel and AMD's (AMD) data center businesses are "in danger" of missing their respective second-half targets, due to the fact that data centers are increasingly focusing on AI demand, led by Nvidia (NVDA). Danely reiterated his neutral rating and $34 price target on Intel (INTC).
In addition to the foundry-related comments, Gelsinger also said the semiconductor giant is "above" the mid-point for its third-quarter guidance.
The company previously said it expected to earn 20 cents per share and generate sales within a range between $12.9B and $13.9B for the third-quarter.
Intel (INTC) shares rose around 1% in pre-market trading on Friday.

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