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Morgan Stanley analysts think that Intel underestimates the difficulties of contract business development

Morgan Stanley analysts think that Intel underestimates the difficulties of contract business development

The speech of Intel CFO at the Bank of America conference has provoked the decrease in the company shares price, because David Zinsner had to admit that the market conditions at the moment were worse than the expectations of the company management.
The pessimism was added by analysts at Morgan Stanley, who are not quite sure about the success of Intel's venture into the contract market.Image source: IntelThe processor giant intends to become a major contract manufacturer of semiconductor components in the next few years, offering customers no less advanced lithography than it will be used for its own needs.
At any rate, the facilities under construction in Ohio will have mastered the production of chips using Intel 18A technology by 2025, and it will be offered to the company's customers at the same time.
In fact, preliminary agreements have already been reached with some of the defense customers.Developing the contract business to a competitive level will require enormous material costs, and Morgan Stanley experts believe that Intel management underestimates the scale of difficulties that the company will have to face on the chosen path.
All of this, of course, does not rule out the success of this business idea, but it may require a much larger investment than Intel currently expects.
All these considerations have already led to the fact that the company's share price fell to a 52-week low ($39.18), and Morgan Stanley experts set the rate benchmark at $46 with a recommendation to sell Intel shares.

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