Intel's cost cuts could give rivals higher ground: analysts

Reuters News
Posted: Jul 16, 2015 9:49 AM

(Reuters) - Intel Corp's move to delay the launch of its next generation chip technology to 2017 may see the company lose ground to rivals Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co Ltd.

Intel's shares opened 2.7 percent higher on Thursday it lowered its 2015 capex forecast for a second time, and at least five analysts raised their share price targets by $1-$2.

But analysts looked past the short-term benefits for the world's largest chipmaker.

"(The delay) will force investors to question INTC’s (Intel's) hitherto unassailable manufacturing dominance," Credit Suisse analyst John Pitzer wrote in a note.

Intel has now twice delayed the launch of 10 nm technology and its smaller and faster chips. The technology had been set for launch this year.

"The other foundries have thus far maintained aggressive plans for future process nodes and INTC will likely face serious questions if these schedules aren’t pushed," Barclays Capital analysts wrote in a note.

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Rivals, TSMC and Samsung Electronics plan to launch their 10 nm chip nodes in late 2016 and early 2017, respectively.

At least two brokerages raised their ratings on Intel. The median price target is $35.

(Reporting By Lehar Maan and Sagarika Jaisinghani in Bengaluru)