Last night, President Joe Biden gave the 2022 State of the Union (SOTU) address. Among the attendants was Intel (NASDAQ:INTC) CEO Pat Gelsinger. During his speech, Biden gave both Intel and Gelsinger a shoutout for a planned $20 billion investment, which will go towards building a new chip manufacturing facility in Ohio. As a result, the praise has helped INTC stock close higher today by over 4%.
Shares of Intel remain down 5% year-to-date (YTD), slightly better than the S&P 500’s YTD return. Still, Biden lauded the chip maker during the SOTU. President Biden stated the following:
“If you travel 20 miles east of Columbus, Ohio, you’ll find 1,000 empty acres of land. It won’t look like much, but if you stop and look closely, you’ll see a ‘Field of dreams,’ the ground on which America’s future will be built. This is where Intel, the American company that helped build Silicon Valley, is going to build its $20 billion semiconductor ‘mega site.'”
Here’s what else you should know about INTC stock moving forward.
INTC Stock: Biden in Favor of Chip Act
On top of his initial announcement in the SOTU, Biden also disclosed that Intel is “ready to increase their investment from $20 billion to $100 billion.” However, this increase is largely contingent on the passage of the U.S. Innovation and Competition Act. The $250 billion bill was approved by the Senate last summer, but still seeks House approval.
This bill is designed to stimulate U.S. semiconductor production and research to compete with China’s technological advances. Out of the $250 billion total, $52 billion will be allotted to boost U.S. semiconductor production.
Currently, 75% of global chip production comes from China. Meanwhile, the United States’ share of global chip production has fallen from “37% in 1990 to 12% today.”
What’s Next for Intel?
Intel hosted its Investor Day last month. The meeting sent shares of INTC stock lower the next day. During the meeting, Intel announced it was pushing back the release of its upcoming server chip — called Granite Rapids — to 2024. The chip maker also disclosed it would be investing lots of money into foundry projects, which may hurt cash flow, revenue and profit margins for the next three years.
All told, Intel is rapidly moving into a phase of preparation and investing for the future. For 2022, CFO Dave Zinsner cautioned investors to expect at least $1 billion in negative cash flow as the company boosts spending. By 2025, Intel plans on achieving 10% annual sales growth.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
