Intel Corporation (INTC)’s Mobile Prospects Promise Upside: Microsoft Corporation (MSFT), Google Inc (GOOG)

Foundry business promises good returns

As the continuing power transition in Intel keeps the board occupied, prospects in the foundry business continue to emerge. There is a great likelihood that the incoming CEO will push forward with a strategic shift, and venture into the contract manufacturing business, or the foundry business if you may.

Both internal and external conditions suggest that Intel will take on foundry. As I mentioned earlier, PC is no longer big. Internally, Intel’s fabrication plants operate at less than half capacity. These underutilized production lines present some promise for the foundry business. Already, Intel Corporation (NASDAQ:INTC) has managed to ink a contract deal with fellow chip maker Altera Corporation (NASDAQ:ALTR). The announcement, which came in mid-March, signals the foundry business’s potential of growing.

An interesting possibility

The biggest play, as far as the foundry business goes, is the possibility of reaching of an agreement with Apple. Well placed sources say that the two companies, despite not reaching an agreement, have been hashing out a possible foundry deal. I believe that Apple needs Intel Corporation (NASDAQ:INTC).

Apple needs to sever its foundry relationship with Samsung, its biggest competitor. In addition, Intel’s 22nm is presents a better energy saving proposition than Samsung’s 32nm. Whether or not this deal goes through is a matter that can be well addressed by the two tech titans’ management.

Conclusion

The foundry business was not highlighted in any of Intel Corporation (NASDAQ:INTC)’s important reports, including the 2012 10-K report filed with the SEC in February. Nevertheless, prospects remain high; especially so after considering that capital spending for the year is set to increase by $2 billion to $13 billion.

In light of this planned increase in capital spending, Intel’s possibility of making inroads in the foundry business look high. These towering possibilities, coupled with awakened prospects in mobile, create huge potential upside for the stock moving forward.

The article Intel’s Mobile Prospects Promise Upside originally appeared on Fool.com and is written by Lennox Yieke.

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