Key Takeaways

• Intel shares moved lower amid concerns about the company's progress on new semiconductor fabrication plants in Germany.

• The uncertainties about Intel's German facilities came as chipmaking rival TSMC broke ground on its fabrication plant in Dresden.

• In contrast with industry peers whose stocks have been lifted by AI hopes, Intel shares are down nearly 60% in 2024.

Intel (INTC) shares sank 6.1% on Thursday following reports that the semiconductor giant's progress on constructing two new chip fabrication facilities in Germany may be stalled.

The company plans to build the wafer fabrication plants in Magdeburg, Germany, on the site it calls "Silicon Junction." In June 2023, Intel announced it was increasing its investment in the project to around $33 billion, having secured a government subsidy of around $11 billion to support the construction.

Intel expected the Magdeburg plants to be online and producing high-performance semiconductors as soon as 2027. However, according to media reports this week, the schedule now appears uncertain.

Concerns About Timeline, Restructuring Plans

Some investors have expressed concerns that, as Intel targets significant cost reductions, the company may choose not to move forward with the plans in Germany.

Intel typically focuses its fabrication capacity on producing its own chips, but the company has been working to expand its third-party fabrication services to drive growth. Given the high costs involved in constructing fabrication facilities, it remains to be seen how the capital-intensive expansion of contract fab services will fit into Intel's restructuring and cost-cutting initiatives, according to Fortune.

Skepticism about Intel's fabrication plants in Germany follows the news that chipmaking rival Taiwan Semiconductor Manufacturing (TSM) has broken ground on its own $11 billion facility in Dresden.

Stock Performance

Following Thursday's losses, Intel shares are down about 60% so far in 2024.

The year-to-date losses distinguish Intel stock from many peers in the semiconductor industry that have been lifted by artificial intelligence (AI) expectations. The Philadelphia Semiconductor Index (SOX) is up more than 20% this year.

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