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Why Intel Stock Gained Today

Intel (NASDAQ: INTC) stock gained ground in Wednesday's trading. The semiconductor company's share price ended the daily session up 2.5%, according to data from S&P Global Market Intelligence.

News emerged today that Intel is planning to build a new chip fabrication plant in Ireland. According to the reports, the semiconductor specialist is looking to secure $2 billion in funding from outside investors before moving ahead with the project.

Intel continues to bet big on chip fabrication

Intel already has a manufacturing plant and a research facility in Ireland, and it's not surprising to hear that the company is looking to build a new fab location in the country. The semiconductor company is making moves to ramp up its fabrication capabilities and is already planning to build new manufacturing hubs in the U.S., Germany, and Israel. Additionally, operating in Ireland offers some substantial tax benefits.

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While most chip designers outsource the fabrication of their chips to a third party, such as Taiwan Semiconductor Manufacturing, Intel actually manufactures most of its own chip designs. With demand for advanced chips rising and geopolitical dynamics creating additional incentives, the U.S.-based chip giant is trying to position itself as a go-to provider of fabrication services.

A monumental shift is underway

Taiwan Semiconductor Manufacturing, or TSMC, is the world's leading contract manufacturer of high-performance semiconductors. Notably, the company currently manufactures roughly 90% of the high-end semiconductors that are used for artificial intelligence and other advanced computing applications. But many analysts and geopolitical strategists anticipate that China will eventually move to exert much greater control over Taiwan. If so, that could limit much of the world's access to TSMC's fabrication services and the chips that it excels at producing.

Intel is making moves to position itself as an alternative to TSMC. Success on this front isn't going to happen overnight, and it's going to require a lot of investment and human capital, but the company has already been receiving substantial government support. Given that Intel is facing strong competition in the chip design space, it's smart of the company to take advantage of potentially massive shifts in semiconductor fabrication.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

Why Intel Stock Gained Today was originally published by The Motley Fool