<News Analysis> Intel’s capex guidance remains strong which bodes well for AEM
What’s New
Intel reports 1Q22 results, beats guidance, capex remains strong
- Intel CFO reaffirms revenue guidance of $76 bn where network and edge group (NEX) and data centre and AI group (DCAI) segments are expected to offset lower than expected PC revenue
- 1Q22 capex came in at $ 4.8bn, +9.3% y-o-y but down by 37.1% q-o-q
- In FY22, Intel’s expects net capex of $27 bn, no change from previous guidance
Our Thoughts
- Despite headwinds such as softer consumer and education demand, supply constraints from COVID lockdowns in Shanghai, and inflationary pressures, Intel’s capex plans remain aggressive, which will bode well for AEM. Higher capital expenditure by Intel has historically translated to greater demand for AEM’s test handlers, which in turn results in higher revenue for AEM.
- Industry outlook remains strong on sustainable semiconductor demand and intact long term structural trends
- Maintain BUY recommendation and TP of $6.04 as Intel’s capex guidance indicates a strong outlook for AEM. Near term key catalyst will include the ramp up of next generation of handlers
