Why Northland remains bullish on Intel stock despite ‘a strategic error’ by Investing.com

Investing.com — Analysts at Northland Capital Markets said in a note on Tuesday that Intel (NASDAQ: faced in its internal modernization. processes.

According to Northland, Intel’s product designs haven’t evolved since the 1990s, resulting in delayed and underperforming chips. Analysts point out that Intel lacks the reusable intellectual property (IP) blocks essential to efficient product development, relying instead on what they describe as “IP blobs” that are difficult to reuse.

Despite these issues, however, Northland remains bullish on Intel’s long-term prospects, maintaining an Outperform rating on the stock.

“The company has executed its development of state-of-the-art process technology, and we believe Intel’s value is in its process technology,” Northland writes.

The firm emphasizes the potential impact of Lip-Bu Tan, who recently left Intel’s board but is recognized for his success in transforming Cadence Design Systems (NASDAQ: ).

Analysts suggest Tan could play a crucial role in modernizing Intel’s design methodology and attracting foundry customers, given his extensive connections in the semiconductor industry.

On the production side, Northland notes that Intel’s trusty tick-tock pattern, which alternates between new architecture and new process technology every year, has weakened since the 10nm process node.

They explain that it has led to overcapacity at legacy nodes, with 80% of Intel’s production still tied to 14nm/10nm processes, which Northland describes as “uncompetitive”.

Despite these challenges, Northland points to geopolitical factors as a reason to remain bullish on Intel.

The firm states: “China will likely move towards Taiwan reunification in 2024-2027. One possibility is around the 2024 US election, when there is chaos over whose president and the ongoing conflicts in Ukraine and the Middle East. 2027 is the 100th anniversary of the PRC, when China expressed its desire to reunify Taiwan.”

They add: “In our view, this likelihood of TSMC being disrupted makes Intel a valuable asset. For these reasons, we view Intel’s manufacturing process and factories as a strategically important asset that will succeed at any cost.”