High Life

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What's going on?

Intel announced on Tuesday that its buying Tower Semiconductor for $5.4 billion, in hopes the Israeli chip manufacturer will take it straight to the top.

What does this mean?

Intel lost its title as the biggest chipmaker by revenue last year, and its been looking for ways to build up its business and reclaim that top spot ever since. And it seems to be hoping that Tower Semiconductor which specializes in making chips for cars and medical sensors can help it do just that. The move, after all, will allow the company to make chips for businesses other than its own, pushing the company into the contract chip manufacturing space that Taiwanese rival TSMC currently dominates. It wont be starting from scratch, either: Tower already has decades of experience making a wide variety of chips for a wide variety of customers, from Broadcom to Analog Devices.

Why should I care?

For markets: Plan B.
Another of Intels revenue-pumping plans involves building more factories across Europe and the US. Then again, sprawling infrastructure and massive acquisitions are expensive, and they could ultimately take their toll on the chipmakers profit. That might be why Intels stock has underperformed an index tracking the worlds biggest chipmakers by 28% in the last twelve months. But Intels sticking to its guns: its expecting its profit margin to get back to normal when these investments start to pay off within the next five years.

The bigger picture: Plan C.
Intels got one more trick up its sleeve: the company’s branching out from its trusty computer chips. It just launched a semiconductor that should make cryptocurrency mining more energy efficient a growing concern within a booming market (tweet this). Its doubling down on its self-driving business too: Mobileye announced plans earlier this week to roll out self-driving electric shuttles in the US in 2024.

Originally posted as part of the Finimize daily email.

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