Intel CEO Eyes Chips Act OK in 2021; Stock Down After Q3

Intel expects its plans to build new chip plants will “benefit from investments from governments" that understand that a "healthy semiconductor industry is vital to their economic well-being and national security,” said CEO Pat Gelsinger on a Q3 call Thursday. With bipartisan support, “we’re hopeful the Chips Act will be passed by the end of this year, allowing us to accelerate decisions for our next U.S. site,” he said. This will “enable a more level playing field with our competitors who enjoy significant support from their governments,” said Gelsinger. “We've also seen considerable interest in the EU with the European Chips Act, and the process to select our next site in Europe is proceeding rapidly. Intel remains the only global company committed to building a leading-edge foundry in the U.S. and Europe for customers around the world.” Demand for semiconductors remains strong, and Intel factories performed “exceptionally well” in Q3, despite “a highly dynamic environment,” said Gelsinger. “Overall industry supply remained very constrained.” The “digitization of everything” is driving “the sustained need for more semiconductors, and the market is expected to double to $1 trillion by 2030,” said Gelsinger. The company forecasts 51% to 53% in gross profit margins over the next two to three years “before moving upward,” said Chief Financial Officer George Davis, vs. 57% expected this year. The stock closed 11.7% lower Friday at $49.46.