Shares of microchip and semiconductor designer Intel (INTC) have declined 6% after the company revised its plans to transition and become a leading chip manufacturer.
Intel has said in the past that it aims to fabricate microchips and semiconductors for third parties and wants to compete head-to-head with Taiwan Semiconductor Manufacturing Company (TSM), which currently makes 60% of the world’s microchips.
Intel Chief Financial Officer David Zinsner explained to investors that Intel will soon change the way it reports its financial results to give its foundry business its own profit-and-loss statement, which would reveal the company’s manufacturing margins.
Intel’s new reporting structure could also help control costs at the chipmaker, which is seeking to trim as much as $10 billion U.S. over the next three years.
The update comes as investors continue to assess Intel’s transition plan, which depends on catching up with TSMC’s manufacturing technology by 2026.
Intel wants to compete for contracts to build high-performance microchips from companies such as Apple (AAPL), Nvidia (NVDA) and Qualcomm (QCOM).
The latest update focused on how Intel will use its manufacturing capabilities for its own chips. It said updates on the foundry business and third-party customers would come later this year.
Analysts questioned how the plan would increase Intel’s gross margins. In April, Intel said its gross margin for this year’s first quarter was 38.4%, down more than 50% in a year.
Intel management said they are aiming for 60% margins going forward. Analysts and investors seemed unimpressed and pushed the stock lower.
Over the past year, Intel’s stock has declined 12% to trade at $32.90 U.S. per share.
