Intel is taking the right steps to invest aggressively in chip manufacturing leadership

We expect Intel to remain the market leader in central processing units (CPUs) for PCs and servers for many years to come. However, Intel’s best days are likely behind it, as it currently has a chipmaking disadvantage compared to Taiwan Semiconductor (TSMC) and its processor partners, such as AMD, Nvidia, and Apple. We believe Intel’s aspirations to regain parity with TSMC are the right path forward, but they come with some execution risks. Even if successful, Intel’s competitors will be stronger than they were a decade ago, when the company dominated. In turn, we assign Intel a “no-moat” rating, a disappointing erosion from its previous “narrow and wide moat” ratings.