Intel (NASDAQ: INTC) CEO Lip-Bu Tan bought $12 million worth of Intel stock on August 12 as part of the chipmaker’s upsized $23 billion equity offering at $95 per share.
While the market generally welcomed the investment as a sign of confidence in the company’s trajectory, Intel share prices have dropped significantly since Tan filed his purchase.
Notably, INTC stock was changing hands at $100.95 on August 12. Since then, it has dropped to $89.47 at the time of writing, August 31. In other words, Tan’s investment was followed by an 11.37% decline in just short of three weeks.
Still, Intel is up 127% year-to-date (YTD), and some ongoing developments suggest the short-term trajectory might be positive.
Is Intel stock going to rally?
The capital raise involving Tan’s purchase came just one month after Intel’s July earnings call, when CFO David Zinsner said the company would not seek additional capital unless it was performing ‘extremely well’ in generating demand for its foundry business.
Later, at the Deutsche Bank Technology Conference on August 26, Zinsner disclosed further plans to deploy the newly raised capital and suggested that Intel may need to accelerate its fab (i.e., manufacturing site) expansion rather than scale back its ambitions.
Indeed, Intel plans to increase production in Ireland and Arizona, with further plans to potentially convert portions of its Oregon facilities, traditionally used as research and pilot manufacturing lines, into high-volume production sites capable of supporting 14A chips.
Under Tan, the chipmaker has reportedly allowed its internal product organization to choose between Intel’s manufacturing processes and external alternatives such as Taiwan Semiconductor Manufacturing (NYSE: TSM). Now, the 14A is set to enter high-volume manufacturing around 2028, potentially making it one of the most important products in recent history.
If the chip delivers on its promises and management succeeds in filling the manufacturing capacity it is now accelerating, Intel stock could be up for another rally in the coming months.
Featured image via Shutterstock
