INTCIntel Corporation

Intel makes processors and is trying at once to regain process leadership and to become a contract foundry for other people's chips.

The company historically combined design with its own manufacturing, and that was an advantage while its process technology led the market. Falling behind TSMC changed the picture: fabless competitors gained access to a better process, and Intel lost share in servers and in personal computers.

The current strategy has two parts. The first is regaining process parity through an accelerated cadence of manufacturing generations. The second is opening the fabs to external customers — competing with TSMC on its own ground. Both demand enormous capital spending, lean on government subsidies, and pay back over years rather than quarters.

As a result the financial picture is set less by sales than by construction: free cash flow is negative and the dividend was cut sharply. For an investor this is a bet on the execution of a multi-year plan rather than on current earnings.