What Intel’s Pivot Means for Semiconductor Stocks

The U.S.’s largest chip maker is getting itself and the United States back in the semiconductor chip-making game with a new CEO and plans to increase outsourcing and ramp up spending on factories.

Barely a month into his role, Intel Corp. (INTC) CEO Pat Gelsinger announced on Tuesday the company’s pivot to spend $20 billion on two new chip factories at its facilities in Arizona starting in 2024.

In another split from the company’s recent past, Gelsinger said Intel will begin to rely on industry giants like Taiwan Semiconductor Manufacturing Co. (TSM) and others to build specialized components of its chips starting in 2023. Intel will also join its own chip-production operations in the U.S. and Europe into a separate division called Intel Foundry Services. And the company is starting to court major customers again like Apple Inc. (AAPL) and competitor Qualcomm Inc. (QCOM).

The moves come at a critical time for the semiconductor industry, which is dealing with a global chip shortage I wrote about back in February. The shortage is hitting auto parts and car manufacturers, forcing companies like Ford Motor Co. (F), General Motors Co. (GM) to idle plants and shrink revenue forecasts for the year.

Intel itself has seen its market share shrink and its share price lag over the past year as the company lost key customers, and suffered heightened competition and missteps in producing more advanced chips. In 1990, the U.S. had 37% of the world’s semi-conductor manufacturing capacity. That figure is now at about 12%, so I applaud Intel’s ambitions to bring back more capacity to the U.S.

Over the past year, the stock has risen 17%, while the industry bellwether, the iShares PHLX Semiconductor ETF (SOXX), soared 95%.

Intel’s stock is currently a “Sell” in my Portfolio Grader with a Total Grade of “D,” as well as a “D” Quantitative Grade, which gauges institutional buying pressure under the stock.

Intel just doesn’t yet have the superior fundamentals I look for before I recommend a stock.

However, I am confident that the crème de la crème of the semiconductor stocks are poised to take advantage of the global supply crunch in the coming months. Especially Taiwanese semiconductor companies that create the chips that go into the LED and OLED displays in cars.

Case in point: United Micro Electronics Corporation (UMC). I recommended the stock to my Growth Investor subscribers back on October 30, 2020.

Over the past six months, the stock has soared 97%, compared to the 32% gain for the iShares PHLX Semiconductor ETF.

In its latest announcement on January 27, the company reported an earnings surge of 166.7% year-over-year, and a whopping 166.7% earnings surprise.

As you can see below, UMC is a “Strong Buy” right now in my Portfolio Grader, where it also earns a Total Grade of “A” and a Quantitative Grade of “A.”

Stick with Fundamentally Superior Stocks

Of course, my Growth Investor Buy Lists are chock-full of fundamentally superior stocks like UMC.

My average Growth Investor stock has had its earnings revised 16.7% higher in the past three months. Typically, positive analyst revisions precede future earnings surprises. In addition, my average stock is characterized by 66.1% annual sales growth and 276.4% earnings growth, so I am expecting a spectacular first-quarter earnings announcement season for my Growth Investor stocks, with my companies set to post wave-after-wave of positive earnings results.

The upcoming earnings season is especially important because it will represent peak sales and earnings for my Growth Investor stocks and the overall stock market due to easy year-over-year comparisons. Simply put, I look for many stocks to post earnings surprises, which, in turn, will drop kick and drive my Growth Investor stocks higher.

And now couldn’t be a better time to join Growth Investor. You see, today I’m releasing four new stocks in my Growth Investor April Monthly Issue – two High Growth stocks and two Elite Dividend Payers. Every stock earns an A-rating in Portfolio Grader, and my Elite Dividend Payers also hold an A-rating in Dividend Grader, making them rare AA-rated stocks. (For full details, click here now.)

So not only will you be well-positioned to benefit from what should be a phenomenal first-quarter earnings season, but it will also help get you on the right side of a great chasm that’s opening up in America. On one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.

On the other side, the opposite is happening. Wealth is flowing out of the pockets of ordinary Americans at an unprecedented rate.

What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.

Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.

It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now. It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.

It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.


Louis Navellier

Louis Navellier

The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

Taiwan Semiconductor Manufacturing Co. (TSM), United Micro Electronics Corporation (UMC)

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