Intel's Mobileye Share Offering and TSMC Agreement Boost Mobileye's Prospects: Wells Fargo

Intel plans to sell 45M Class A shares of its stake in Mobileye, an Israel-based tech company specializing in autonomous driving systems. Wells Fargo views this development as positive for Mobileye. The sale is expected to reduce Intel's stake in Mobileye from 42% to 34%. Additionally, Intel and TSMC have reached a new agreement, which is expected to increase TSMC's capacity to meet Intel's demand for chips.

Intel Corporation (NASDAQ:INTC) has announced plans to sell 45 million shares of Mobileye Global Inc. (NASDAQ:MBLY) in an underwritten secondary public offering, with an option for underwriters to purchase an additional 6.75 million shares [1]. This move is expected to reduce Intel's stake in Mobileye from 42% to 34%.

The offering, being conducted by Intel Overseas Funding Corporation, a wholly owned subsidiary of Intel, will not involve Mobileye selling any shares or receiving proceeds. Instead, Intel has agreed to repurchase $100 million of Mobileye's Class A common stock at the same price paid by underwriters [1]. Additionally, Intel plans to convert 50 million shares of Mobileye's Class B common stock into Class A common stock, contingent on the offering's completion [1].

Mobileye, valued at approximately $15 billion, has maintained a strong financial position with a healthy current ratio of 7.64x and more cash than debt on its balance sheet [1]. Despite a -33.82% return over the past year, analysts are optimistic about its future profitability, with earnings forecasts turning positive for this fiscal year [1].

Intel and Taiwan Semiconductor Manufacturing Company (TSMC) have also reached a new agreement, which is expected to increase TSMC's capacity to meet Intel's demand for chips [1]. This development comes as Intel considers a shift from its 18A foundry node to the 14A process, potentially shelving external 18A volumes and accelerating 14A ramp-up to attract customers like Nvidia [2]. This move could lead to billions of dollars in capex write-downs and asset impairments, but Intel's management is focused on building trust with customers and competing with TSMC.

Investors should note that Mobileye's next earnings report is scheduled for July 24, with comprehensive analysis available through InvestingPro's Pro Research Report [1]. Goldman Sachs & Co. LLC and BofA Securities, Inc. are serving as joint lead book-running managers for the offering, which is subject to market conditions and regulatory approvals [1].

References:
[1] https://www.investing.com/news/company-news/intel-subsidiary-to-sell-45-million-mobileye-shares-in-secondary-offering-93CH-4127206
[2] https://www.ainvest.com/news/intel-18a-plans-jeopardy-pressure-mounts-tsmc-execution-risks-loom-2507/