Intel Gains on Chip Manufacturing Optimism

Intel (INTC) shares rallied nearly 3% in premarket trading Wednesday, continuing a surge from Tuesday after Vice President JD Vance expressed positive sentiments towards domestic chip manufacturing.

Policy Support for Domestic AI Chip Production

At the AI Summit in Paris, Vance stated that the Trump administration "will ensure that the most powerful AI systems are built in the US with American designed and manufactured chips." Intel stock surged 6% following these remarks.

Intel's Position in Domestic AI Chip Production

Despite internal challenges that have hindered its chip manufacturing dominance, Intel remains a key player in domestic AI chip production. The company is the sole large-scale American leading-edge foundry for computer chips, producing for both itself and other entities.

Global Chip Manufacturing Landscape

Most advanced AI chips are currently manufactured in Taiwan by TSMC (TSM). Intel outsources production of its own advanced AI chips to its rival. While Samsung (005930.KS) and TSMC have expanded US operations, their primary manufacturing facilities remain overseas.

Challenges and Uncertainties

It is unclear how the Trump administration will "ensure" AI systems in the US utilize US-made chips as Vance suggested. Additionally, Intel lags behind TSMC in manufacturing capabilities. Current employees have reported issues with the company's latest AI chip manufacturing process.

Recent Developments at Intel

Intel's long-term commitment to foundry has been questioned following the departure of CEO Pat Gelsinger and its AI chief. The company is searching for a new CEO and remains focused on achieving breakeven operating income for its Foundry business by 2027.

Market Performance

Despite the recent gains, Intel stock remains down over 50% from last year, with a market cap of $91 billion. Its quarterly revenue has declined year-over-year for three consecutive quarters.