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citi, a well-known wall street investment bank, called on us chip manufacturing giant intel to exit the foundry business on thursday (september 5); at the same time, some analysts suggested that investors should sell the stock.

the foundry business mainly produces semiconductors based on the company's internal design, or like tsmc, produces chips based on the designs of other companies. currently, tsmc is the world's largest chip foundry, and its customers include nvidia, amd, etc.

since pat gelsinger took over intel, the company has begun to bet its future on the foundry business, trying to enhance its ability to manufacture the most advanced chips for itself and other companies in its foundries in the united states. the plan has also received financial support from the us government. in a document released by the us department of commerce a few months ago, it mentioned an $8.5 billion grant and an $11 billion federal loan for intel.

but the problem is that due to intel's serious decline in performance, the media previously reported, citing sources, that the company may not be able to successfully obtain subsidies from the us government.

the commerce department and intel are at odds over information disclosure requests. intel is frustrated with the u.s. government's delays and has urged officials to expedite the release of funds, according to people familiar with the matter. u.s. officials are seeking to review the feasibility of intel's chip production roadmap, but the company has refused to provide certain information requested by the government.

call for withdrawal from oem business

intel executives attended the citi tmt conference on wednesday (september 4), and then on thursday, citi analyst christopher danely again called on intel to exit the foundry business.

danely, who had previously been bearish on intel, again claimed that intel's stock price was too expensive and that its plans for the foundry business had "little chance of success."

it is worth mentioning that recently, intel's proud 18a process seems to have encountered setbacks. the 18a process, which produces 1.8 nanometer chips, has always been regarded as the "magic weapon" for intel's chip foundry business and is expected to be put into production in the second half of 2024. however, the 18a process technology is likely to fail at present.

according to people familiar with the matter, chipmaker broadcom has conducted trial production of the 18a process and recycled test silicon wafers last month. but after engineers and executives studied it, broadcom believes that intel's 18a is not yet sufficient for high-volume production.

there are also reports that broadcom engineers seem to be concerned about intel's 18a yield, which means that the number of scraps on each wafer exceeds expectations. this is likely to become a major setback for intel's foundry business.

intel's stock price has fallen 61.4% so far this year, falling nearly 12% in the first three days of september alone. it fell a staggering 28.3% in august as it reported a loss of $1.61 billion in the second quarter and said it would lay off 15,000 employees. the stock price is currently just above its 52-week low of $18.84 set on august 8.

intel shares closed down 0.15 percent at $19.40 in nasdaq trading on thursday. they rose to $19.47 after hours.

citigroup wasn't the only firm to turn down intel this week. hans engel, an analyst at austria-based erste group research, downgraded intel's stock rating to "sell" from "hold" on thursday. he did not give a price target.

engel blamed it on a very uncertain outlook, weak sales (loss of market share in server cpus) and high debt, but he also admitted that intel is in a transition phase.