Intel's $20B Capex Plans Could Affect Q1 Results: WSJ

Intel Corp’s INTC quarterly sales and profit estimates are estimated to take a hit following CEO Pat Gelsinger’s aggressive $20 billion spending commitment for two new Arizona semiconductor plants, the Wall Street Journal reports.
Gelsinger recently agreed to make some of its production capacity available to resolve the automaking chip crisis.
Intel is scheduled to post its first quarterly earnings on Thursday. The Street estimates a 10% decline in first-quarter sales to $17.8 billion and net income of $4.3 billion.
Intel is expected to generate a revenue of around $17.5 billion, as it planned to divest its memory business to South Korea’s SK Hynix Inc HXSCL
Demand surge for lower-end devices like Alphabet Inc GOOG GOOGL Chromebooks, and Apple Inc’s AAPL preference for in-house chip designs for certain equipment instead of Intel, was attributed to the decline by a Bank Of America Corp BAC analyst. The analyst estimated the 2021 outlay to move at a slower pace after a strong year of data center spending. The analyst forecast Intel’s sales growth to lag the broader sector growth of 15%.
Last month, Gelsinger disclosed the company’s progress on its newest chips. Intel also intended to increase outsourcing of some chip production.
NVIDIA Corp NVDA recently disclosed its plans of selling central-processing units for data-centers, a market that Intel previously dominated. Intel this month introduced an enhanced data-center chip.
Last week, Taiwan Semiconductor Manufacturing Co Ltd TSM increased its 2021 capital-expenditure plan to $30 billion while lifting its sales forecast. Samsung Electronics Co Ltd SSNLF reserved $116 billion by 2030 to diversify chip production.
Gelsinger talked about Intel’s additional chip investment plans. Intel is bidding on a Pentagon contract for domestic chip-making funding to accomplish government security requirements.
Last month Intel expected the 2021 revenue to decline 7.6% to $72 billion due to the memory business divestment. Intel has estimated a capital expenditure spending between $19 billion to $20 billion for 2021.
Price action: INTC shares traded lower by 0.47% at $63.40 on the last check Thursday.

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