Intel reported earnings, beating expectations with 15% earnings growth and 4% revenue decline. Shares dropped 17% despite being up 20% this year. The focus is on Intel’s shift to foundry operations to compete with Taiwan Semiconductor. The success of their 18A process node is crucial for securing customers and future growth.

Intel’s strategic shift to foundry operations is tied to national security concerns. Backed by the US government, Intel aims to compete with TSMC in advanced chip manufacturing on US soil. Success could make Intel a key supplier for companies like Nvidia and Apple, reshaping the semiconductor landscape.

The valuation gap between Intel and TSMC reflects different risks and potential. TSMC’s dominance justifies its valuation, while Intel’s heavy investments depress earnings. If Intel’s foundry strategy succeeds, earnings could rise significantly, narrowing the valuation gap. Geopolitical factors also impact valuations, with TSMC facing geographic risks and Intel benefitting from a US-based strategic premium.

Investors face a choice between Intel and TSMC. TSMC is a high-quality company with dominant market position, while Intel is undergoing a challenging but potentially rewarding turnaround. With government support, strong demand, and technical progress, Intel has the potential to compete with TSMC and reshape the semiconductor industry, offering investors a unique opportunity for long-term growth.

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Read more at Nasdaq: Intel vs. TSMC: Can Intel Close the Gap?