Intel Stock Up on US Chip Manufacturing Hopes
Intel (INTC) shares surged 3% in early trading on Wednesday, continuing the previous day's gains triggered by bullish comments from Vice President JD Vance on domestic chip manufacturing.
Vance emphasized at a speech at the AI Summit in Paris that the Trump administration will prioritize building the most advanced AI systems in the US using domestically designed and manufactured chips. Intel stock jumped 6% in response to these remarks.
Intel faces internal challenges in chip manufacturing dominance, but remains a key player in US aspirations for domestic AI chip production. It's the only major American leading-edge foundry, producing chips for itself and others.
However, TSMC (TSM) in Taiwan dominates the production of the world's most advanced AI chips. Even Intel relies on its rival for the manufacturing of its most sophisticated AI chips.
Samsung (005930.KS) and TSMC have expanded US operations with incentives from the US CHIPS Act, but most of their manufacturing capacity remains in their home countries.
Vance's comments raise questions about how the Trump administration would enforce the use of US-made chips in domestic AI systems. Trump previously criticized the CHIPS Act, which was enacted under President Biden.
Intel has fallen behind TSMC in manufacturing, with employees expressing concerns about issues with its latest AI chip manufacturing process.
Despite a two-day gain, Intel stock remains down over 50% year-over-year, with a market cap of $91 billion that pales in comparison to tech giants. Intel reported a third consecutive quarterly revenue decline in January.
The company's foundry business, which includes agreements with Amazon AWS and Microsoft, continues to weigh on overall revenue.