It’s fine if you want to root for the underdog, but investing in a problem-riddled business is a different story entirely. Intel’s (NASDAQ:INTC) loyal shareholders have been rewarded with nothing but disappointment this year so far. We hate to be the bearer of bad news, but the outlook is grim and Intel stock only deserves a “D” grade right now.
We’ve already explained how Intel shares aren’t actually cheap even though the stock price is in the gutter. Furthermore, we pointed out that Intel’s position of cash and cash equivalents is dwindling and the company is unprofitable on a GAAP-measured basis. Now we have more information to share about Intel, and it won’t inspire confidence in prudent investors.
U.S.-China Tensions Will Continue to Weigh on Intel
The Biden administration is ramping up tariffs on China-made chips coming into the U.S. for sale. According to The Wall Street Journal, the “tariff rate for Chinese semiconductors would double by 2025 — to 50% from 25%.”
President Joseph Biden expects China to retaliate against these tariffs. Thus, investors should expect the Sino-U.S. trade-and-tech war to persist for a while.
This is probably true regardless of the 2024 U.S. presidential election’s outcome, since Donald Trump expressed his intention to impose tariffs of up to 60% on a broad range of products imported from China.
The story doesn’t end there, however. Bloomberg just reported that the Biden administration is considering restricting China’s access to a “cutting-edge chip architecture known as gate all-around, or GAA.”
Bloomberg specifically mentioned Intel as a chipmaker that’s “looking to start mass-producing semiconductors with the GAA design within the next year.”
Of course, Intel won’t be able to easily export GAA chips to China if there are restrictions in place. It’s just another potential problem that Intel’s loyal shareholders will need to bear in mind in 2024.
Intel Suddenly Halts Progress on Chipmaking Factory
In other news, there’s something strange going on with Intel. First, the company divested nearly half its stake in a venture related to a chipmaking plant in Ireland.
Was this a sign that Intel’s management wants the company to back out of Ireland? Or possibly, is Intel having serious trouble financing the Irish factory?
Now, the plot thickens. In an odd twist, Intel reportedly just halted its progress on a $25 billion chipmaking factory in Israel.
This seems to contradict Intel’s claim that the company is “fully committed to the region” of Israel. Additionally, this feels like a huge letdown since there was so much anticipation associated with Intel’s plans in Israel.
This news story probably isn’t over yet, so stay tuned for further developments. For now, however, the abrupt news about Intel’s Israeli chipmaking factory plans might alarm some investors.
Intel Stock: Give This a No-Confidence Vote
Intel isn’t an absolutely hopeless company right now, and we’re not giving the company’s stock an outright “F” grade. On the other hand, investors can’t afford to ignore Intel’s red flags.
Besides, the China-U.S. trade-and-tech war could last for a long time. Amid this volatile backdrop, investors need to be selective.
Intel, which already has a number of problems to deal with, could be the weakest link among chipmakers as the trade war drags on. We’re assigning Intel stock a “D” grade and cannot currently recommend the stock with confidence.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.