Taiwan Semi Founder Calls For New Strategy After Intel Chief's Departure

Taiwan Semiconductor Manufacturing Co TSM founder Morris Chang told Reuters Monday that Intel Corp INTC should have focused on developing its artificial intelligence moat instead of contract chipmaking.

Chang’s comments followed Intel chief Pat Gelsinger’s departure after he failed to impress the board with his turnaround efforts. Intel stock has plunged 58% year-to-date.

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During Chang’s autobiography launch event, he emphasized the need for a new strategy and CEO for Intel.

In November, Chang released his biography, which included Taiwan Semiconductor’s deals with Apple Inc AAPL and Qualcomm Inc QCOM and how Intel abandoned an invitation to invest in Taiwan Semiconductor in the 1980s before becoming a key customer.

Gelsinger’s turnaround efforts involved making the fastest and most minor computer chips for other companies, but Taiwan Semiconductor eventually overtook this advantage. Taiwan Semiconductor stock surged over 89% year-to-date.

Chang said Intel lost or canceled contracts with major clients while aiming for ambitious manufacturing and AI capabilities.

On Tuesday, S&P Global Ratings downgraded Intel’s credit rating to ‘BBB’ from ‘BBB+ citing weak business recovery and uncertainty following Gelsinger’s exit.

However, the firm expects Intel’s client computing segment to post growth after a modest recovery in 2025 backed by the PC refresh cycle and its Data Center and AI (DCAI) and Networking and Edge segments.

Meanwhile, Intel tapped semiconductor veterans Eric Meurice of ASML Holding NV ASML and Steve Sanghi of Microchip Technology Inc MCHP to its board. Intel has narrowed its eligible CEO list to include former director Lip-Bu Tan.

William Stein of Truist Securities and Cody Acree of Benchmark recommended selling the entire Intel company or parts of it, including splitting the manufacturing and products businesses and downsizing. They also noted that Intel’s current focus on separating its Products and Foundry businesses could mean forfeiting the $7.8 billion in U.S. chip subsidy.

Intel interim co-CEO David Zinsner expects the next CEO to be equipped with manufacturing and product skills.

Investors can gain exposure to Intel through First Trust Nasdaq Semiconductor ETF FTXL and REX FANG & Innovation Equity Premium Income ETF FEPI.

Price Action: INTC stock traded higher by 0.20% at $20.20 at premarket Wednesday.

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