The Italian government is preparing an offer to convince Intel Corp. (INTC) to build an advanced chipmaking plant in the country, Reuters said in a report, citing people familiar with the matter. According to the preliminary estimates, the company could potentially invest between €4 billion and €8 billion in the plant.
The government’s efforts come as German city Dresden has come to the fore as a candidate site for Intel’s planned megafactory, the sources added. (See Insiders’ Hot Stocks on TipRanks)
Intel is planning to announce the location of two new European fabrication plants by the end of 2021. Both these plants are part of the company’s drive to build cutting-edge manufacturing capacity in Europe in a bid to avoid supply shortages that are currently impacting the automotive industry.
The sources said, “Rome is ready to fund part of the overall investment with public money and offer favorable terms to Intel, including on labor and energy costs.”
Potential sites for the factory, which would create more than 1,000 direct jobs, include Catania in Sicily and Mirafiori area in Turin.
Shares of the company plunged 11.7% on Friday to close at $49.46.
Last week, Goldman Sachs (GS) analyst Toshiya Hari maintained a Sell rating on the stock and lowered the price target to $44 from $51 (11% downside potential).
In a research note to investors, the analyst said, “While management is taking the necessary steps to ultimately be in a position to potentially regain technology and performance leadership, the stock will underperform over the near and medium-term given the deflated earnings and cash flow outlook.”
Overall, the stock has a Hold consensus rating based on 5 Buys, 10 Holds and 7 Sells. The average Intel price target of $54 implies 9.2% upside potential. Shares have lost 15.8% over the past six months.
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