Intel Stock is down. Investors wanted clarity they didn’t get.

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In recent weeks, investors have rewarded

Intel.

The company recently announced a new CEO and has attracted a strong activist shareholder.

Now, executives seem to have disappointed some who had become more positive about the company’s outlook. He said Thursday that he would essentially double his chip manufacturing strategy in-house, rather than having another specialist make the semiconductors instead.

Intel stock (ticker: INTC) plunged 8.3% to $ 57.26 on Friday.

Beloved incoming CEO Pat Gelsinger did little to help the stock during a call with analysts and investors on Thursday. In his opening remarks, Gelsinger said that after reviewing Intel’s progress in perfecting its next-generation manufacturing technology, it will remain committed to building the majority of the company’s chips under its own roof. But at the same time, he said to meet its needs, the veteran chipmaker would have to look outside and hire more companies to help it.

“Based on the initial assessments, I am satisfied with the progress made on the health and recovery of the 7 nanometer program,” Gelsinger said. “I have no doubts that the majority of our 2023 products will be manufactured in-house. At the same time, given the breadth of our portfolio, it is likely that we will expand our use of external smelters for certain technologies and products. “

Investors wanted a clear decision on how the next generation Intel chips will be produced, but they didn’t get one. The earnings outlook was also unclear.

Intel hasn’t released a full-year financial forecast, as the company usually does on its fourth-quarter calls, only telling investors it was forecasting non-GAAP earnings of $ 1.10 per share for sales of $ 17.5 billion. The number excludes flash memory activity, which Intel sold last year.

On the bright side, current CEO Bob Swan – who is shown the door on February 15 by the board of directors – explained that Intel engineers essentially fixed the performance issues Intel was having with its so-called manufacturing technology. to seven nanometers.

To increase the processing power of chips and stay competitive in the semiconductor industry, companies must continually invent new ways to shrink the building blocks of chip transistors and squeeze more of them onto a piece of silicon.

This is now an engineering problem at the atomic level, making chip manufacturing difficult, complex, and expensive. And

Semiconductor manufacturing in Taiwan

(TSM), an Intel rival and frequent business partner, is very good at making chips.

Raymond James analyst Chris Caso summed up the problem with Intel’s plan perfectly: “The problem with this strategy is that, even though Intel is successfully running on 7nm, they are still a node behind TSMC. . And we don’t think [Intel] can deliver leading products without leadership in transistors because it has never been done before. Who keeps [Intel] behind the industry for four more years. “

The fact that Intel would continue to manufacture its own chips seemed to Jefferies analyst Mark Lipacis as an announcement that it had slipped on next-gen technology again. Executives previously told investors that they plan to ship their next-generation processors by the end of 2022. Telling investors that they will manufacture their 2023 chips in-house would again suggest that their products will be delayed.

While the outlook for the first quarter looked good, Intel’s delay in providing real clarity on its manufacturing strategy until later this year makes the stock difficult to recommend, the RBC Capital Markets analyst wrote, Mitch Steves. He credits the action with the equivalent of a sale and reiterated that call due to the company’s lack of clarity on its future.

Intel stock fell nearly 10% last year, while the benchmark PHLX Semiconductor index climbed 60%.

Write to Max A. Cherney at [email protected]