Intel Corp (INTC)

[wbmw]

The Intel supporter has always fallen back on, "Intel will win in the end because they spend more than anyone else on manufacturing." Well, now they're clearly not, and they're headed in the wrong direction relative to TSMC, etc. Suddenly it just doesn't matter? Now it's, "they could if they wanted to?"

You're obsessed with the wrong statistic.

When it comes to CapEx, there are process development costs, as well as factory build costs. We don't have the visibility here to determine if Intel is spending any less on process development than they have in the past, and my guess is that they are probably spending MORE. However, the majority of annual CapEx is going into scaling out the process into factories, and to the extent that Intel can save costs by reusing factory space and existing machinery, they owe it to their shareholders to do so.

TSMC also serves a larger market in terms of unit volume. Much more of their CapEx is going into factory build costs. If Intel can win enough of the phone and tablet business, I'd like to see them increase their CapEx spending in proportion, but they shouldn't overbuild before they have the market in place, and I think the CapEx spending reflects that.