Intel Corporation (INTC): Should The Semiconductor Manufacturer Change Strategies?

However, this hasn’t stopped the sell side from dreaming.

JPMorgan Chase & Co. (NYSE:JPM)‘s Christopher Danely believes the foundry market is worth $38.4 billion a year and Intel could capture about 11% of that market. The catch is that Intel would have to land the highest of high-profile clients, Apple Inc. (NASDAQ:AAPL). Since Apple designs custom processors based on ARM designs, it’s highly unrealistic that Intel would just give up the goods to Apple Inc. (NASDAQ:AAPL).

It might be more realistic to think that when Intel Corporation (NASDAQ:INTC)’s cutting-edge 14-nanometer foundries begin pumping out Intel Atom cores next year, perhaps Apple would consider making the shift from ARM Holdings plc (ADR) (NASDAQ:ARMH) to Intel for its iDevices. However, Apple Inc. (NASDAQ:AAPL) is notoriously known for its premium products, not necessarily leading-edge technology, unless it offers a huge leap in the user experience. The verdict is still out on that.

Living on the leading edge
Intel is at a bit of a crossroads in how it could move forward. If it were to open up its foundry to competitors, it could prove to be a valuable move for shareholders, assuming its stock fetches a similar valuation to TSMC’s. However, offering up its leading-edge technology to competitors may not be in Intel Corporation (NASDAQ:INTC)’s best interests since it could potentially disrupt its existing chip-making business. Ultimately, Intel has ambitions for its chips to be found in every computing device imaginable, regardless of form factor.

Intel’s decision to remain a selective foundry indicates that its leading-edge technology is in fact its greatest asset. The question remains if this asset will bear any real fruit in the coming years.

The article Should Intel Change Strategies? originally appeared on Fool.com and is written by Steve Heller.

Fool contributor Steve Heller owns shares of Apple and Intel. The Motley Fool recommends and owns shares of Apple and Intel. It also owns shares of JPMorgan Chase.

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