Key Highlights

● Susquehanna flagged a likely loss of laptop CPU Market Share for Intel to AMD in the third quarter.

● The same day, Elon Musk confirmed early talks for TSMC to join Terafab, where Intel has been the sole Manufacturing partner since April.

● AMD's own shares slipped slightly despite the favorable CPU-share report.

Intel fell on Monday, Oct. 5, as a Susquehanna warning about lost CPU share to AMD landed on the same day Elon Musk confirmed early talks for TSMC to join his Terafab chip venture.

A double dose of bad news

Intel (NASDAQ:INTC) fell on the Nasdaq-100 on Monday, hit by two separate concerns at once. The first was a warning from Susquehanna, which flagged a likely loss of CPU market share to rival AMD (NASDAQ:AMD) in the third quarter.

Susquehanna's figures showed Intel's share of the laptop processor market slipping further, a sensitive point for a company whose core Business has long been selling the brains of personal computers.

The second blow came from Elon Musk, who confirmed preliminary talks for Taiwan Semiconductor Manufacturing (NYSE:TSM) to join Terafab, his Texas chip-manufacturing venture where Intel has been the sole named manufacturing partner since April.

Processors for laptops and desktops remain one of Intel's largest sources of revenue. When AMD gains ground, Intel loses sales and pricing power in a market it has long led.

Susquehanna's note added to a picture of a company fighting on several fronts: defending its PC business, rebuilding its manufacturing technology and trying to win outside foundry customers.

Interestingly, AMD did not get a lift from the report on Monday. Its shares slipped slightly amid the wider Terafab and TSMC news flow.

The Terafab factor

Musk's comment on the TSMC talks was brief. "Just discussions, but something may come of it," he said.

Intel joined Terafab in April using its 14A process, and the venture is meant to Supply chips to Tesla (NASDAQ:TSLA), SpaceX (NASDAQ:SPCX) and xAI. Investors worried that adding TSMC could end Intel's exclusive role in a project seen as an important vote of confidence in its foundry ambitions.

The chip sector was mixed. Nvidia (NASDAQ:NVDA) closed at a record and TSMC's US-listed shares rose near record highs. GlobalFoundries (NASDAQ:GFS) slid after BNP Paribas Exane downgraded it to Neutral, and United Microelectronics (NYSE:UMC) tumbled with no news cited.

Hard-drive makers Western Digital (NASDAQ:WDC) and Seagate (NASDAQ:STX) rebounded after a selloff on Friday.

Records for the Nasdaq

The broader market rose. The Nasdaq-100 closed at a record 31,076.44, and the Nasdaq Composite jumped 286.45 points to a record 27,477.31. The S&P 500 added 51.23 points to 7,773.95, just shy of its summer record. The Dow rose 90.94 points to 51,267.90.

That came despite the 10-year Treasury Yield climbing to its highest level since 2002 after the ISM services prices-paid index hit 74.0, the highest since July 2022. Friday's weak jobs report, showing payrolls up just 29,000, cut bets on an October Fed hike.

The road ahead for Intel

Intel's Investment case now rests on several moving parts at once. It must hold its ground in PC processors, show progress in manufacturing and keep big customers such as Terafab on board. Monday's news touched two of those three areas.

What to watch

The next read on CPU share will come from Intel's next quarterly report, along with updates on its foundry business. Any news on TSMC's role in Terafab will also be closely watched.

Minutes from the Fed's September meeting arrive Wednesday, Oct. 7 at 2 p.m. ET, and the Fed meets again Oct. 27 to 28.