$Intel(INTC.US)

Dolphin Research just covered Intel last year and felt that it is a company on the verge of collapse, with its competitiveness basically at zero. Apart from relying on the old foundation of computer CPUs from the PC era 20 years ago, there is nothing else to look forward to.

The arrival of the AI era has dealt a fatal blow to Intel's PC CPU business, as AI PCs are based on a combination of GPU, PCU, and NPU. Due to their high computing power requirements and severe heat generation, the X86 architecture will gradually be replaced by ARM, leading Intel's foundry business into the TSMC + ARM era.

Regarding CPUs for data centers, merchant computing power from NVIDIA and AMD is providing total solutions, either through self-developed ASICs in cloud services, while Intel's CPU business is continuously extending the amortization and depreciation of asset investments by cloud service providers. All business lines are basically in a state of shrinkage.

And these logics have already been fully reflected in the valuation pricing.

Then, Trump's serious industrial protectionism appeared. Under the policy advocacy of manufacturing return, Intel, as a "domestic" high-end manufacturing foundry enterprise that includes semiconductor foundry, has become a key object of protection.

Of course, from the government's perspective, it is not the Intel brand that is being protected, but the core assets after Intel is dismantled.

Moreover, the government is directly involved in the negotiation of core asset transactions. According to the latest news from Reuters yesterday, TSMC has lobbied four chip design companies—NVIDIA, AMD, Broadcom, and Qualcomm—to jointly invest in a joint venture, which is mainly to operate Intel's foundry.

In terms of role allocation, TSMC will be responsible for operating Intel's wafer foundry business. More importantly, TSMC's equity in the joint venture will be less than 50%. This completely aligns with Trump's demand that domestic manufacturing should not be controlled by foreign forces.

However, under the current circumstances, with Intel being sufficiently undervalued, the ongoing "rescue plan" for Intel means that from an investment perspective, there is no need to continue valuing Intel as a whole business that is declining; instead, it is increasingly turning to SOTP (Sum of the Parts), which means breaking down each business to see how much individual value each segment has.

Especially now that a knowledgeable Chinese CEO has been appointed, whether he can skillfully manage relationships with TSMC and others to maximize Intel's interests is also very much worth looking forward to.