Is Intel or TSM the Better Semiconductor Play?

TL;DR

TSM and Intel are both making big expansion bets, with Intel being undervalued and TSM potentially facing a discount due to geopolitical risks.

Transcript

[Applause] both tsm and intel corporation are making big expansion bets does anybody have a preference over the other uh well i think you definitely have a preference over the other so i'll pass it over to you first um in this case i like intel better and this is basically a valuation call because uh tsm has has an evaluation i think in the 30s the... Read More

Key Insights

• 😀 TSM has a higher valuation compared to Intel, potentially facing a discount due to geopolitical risks.
• 💄 Intel is undervalued, making it an attractive investment option.
• 👶 Investing in Intel carries the risk of substantial spending on building a new business.
• ❓ TSM remains the established leader in the industry, while Intel is striving to catch up.
• 😊 Both investments have their pros and cons, and the decision depends on the investor's risk tolerance.
• 👶 TSM offers a sense of comfort as the leader, but Intel provides an opportunity for growth in new markets.
• 🥺 Intel's core chip business is under pressure from competitors, leading to the need for diversification.

Questions & Answers

Q: Why does the speaker prefer Intel over TSM?

The speaker prefers Intel due to its undervalued status, with a potential to catch up to TSMC's progress. Although it is speculative, Intel's progress could lead to a higher valuation.

Q: What makes Intel a risky investment?

Intel is taking the risk of spending a significant amount of money to build a new business in a market they haven't been in before. This will require a more capital-intensive approach, and success depends on having faith in CEO Pat Gelsinger's strategies.

Q: Is the speaker willing to invest in both TSM and Intel?

The speaker would invest in both TSM and Intel, considering the potential benefits and risks associated with each. Holding the leader (TSM) provides a sense of comfort, while investing in Intel offers the opportunity for growth in their manufacturing business.

Q: What are the reasons behind Intel's expansion into new businesses?

Intel is facing pressure in their core chip business due to competitors like AMD and tech giants like Microsoft and Amazon designing their own chips. To combat this, Intel is diversifying and entering the manufacturing business.

Summary & Key Takeaways

• TSM has a valuation in the 30s while Intel is undervalued at 10 times earnings.

• TSM may face a discount due to geopolitical risks, although the possibility of invasion is not likely.

• Intel is taking a risk by spending billions to build a new business, while facing pressure in their core chip business.