Chip giant Intel (NASDAQ: INTC) is playing catch-up, and catch-up is expensive.

Third-party foundry TSMC has pulled ahead of Intel in terms of manufacturing technology. That leaves Intel in a tough spot for two reasons. First, it gives competitors like AMD access to superior manufacturing tech, which puts the company in an uphill battle to maintain its dominant CPU market share. Second, it adds risk to Intel's plan to build its own world-class foundry business.

Intel will spend roughly 35% of its revenue on capital expenditures in 2023 and 2024. Combined with the impacts of a tough PC market and extensive cost cutting, the net result of this investment binge will be essentially no free cash flow in those years. It's only in 2025 and beyond that Intel expects to get its free cash flow margins back to approximately 20%.

Continue reading

Source Fool.com