Intel, HPQ Silicon, Volkswagen: A Look at Stocks Across the Silicon Value Chain, from Chips to Batteries, Following Recent Declines

Intel: Demand for chips exceeds supply

Intel presented its third-quarter results on October 29. Revenue was USD 16.5 billion, while adjusted earnings per share were USD 0.52, exceeding its own forecast of USD 0.38. The business was driven by the data centre segment, generating USD 7.3 billion in revenue, up 78% from a year earlier. Demand for server processors exceeds supply, and wafer and substrate shortages are expected to persist into the first half of 2027. Management expects this market to grow from USD 40 billion to more than USD 200 billion in 5 years.

Intel still needs to deliver on contract manufacturing for other companies. The foundry generated revenue of USD 6.7 billion and recorded an operating loss of USD 1.9 billion, while revenue from external customers was USD 411 million. At least costs are falling, as wafer costs on the 18A process have fallen by 40% since the first quarter. For its successor, 14A, selected customers received the development documentation (PDK 0.9) in October, with version 1.0 scheduled to follow in the first quarter of 2027. Risk production is planned for 2027, with volume production scheduled for 2028. According to management, the first customers for the EMIB packaging process could be named within two quarters.

The outlook is weaker, however. For the fourth quarter, Intel is targeting revenue of USD 15 to 16 billion, with an adjusted gross margin of 38% and earnings per share of USD 0.25. An incident at Fab 28 in Israel will cost around USD 300 million in revenue and roughly 200 basis points of margin in the fourth quarter. The impact is expected to be similar in the first quarter of 2027. PC revenue is expected to fall by more than 20% quarter-on-quarter. 2027 is expected to be a year of growth, but without positive free cash flow, as capital expenditure continues to rise from around USD 20 billion. If the bottlenecks can be resolved, the data centre business could close the gap.

HPQ Silicon: First orders for silicon anodes

Novacium, in which HPQ holds a 36.8% stake, is making progress with its silicon anode in the defence sector. On August 19, the company received its first order through partner LN Innov for third-generation battery packs with a capacity of 6,000 mAh, which will be installed in drones for a French Army regiment. On September 17, the first order for more than 100 packs for an interceptor drone from Alta Ares followed. On October 6, the first batch of prototype batteries was delivered to the French Army's technical department. They store 144 Wh, up from the previous 72 Wh.

In North America, HPQ markets the cells under the name ENDURA+. On July 20, the fourth-generation cell in the 21700 format received UL 1642 safety certification. The certified capacity is 6,500 mAh, which is 8.3% more than the third generation's 6,000 mAh. On October 15, HPQ entered into an agreement with Aptera Motors, a developer of solar vehicles, to evaluate the cells. This is not yet an offtake guarantee, but it means Aptera is testing the cells under conditions close to their intended application. If the test succeeds, further steps could follow. That would work in HPQ's favour.

Alongside batteries, HPQ is expanding two other pillars of its business. On October 27, it was announced that the consortium led by Novacium, with Axel'One and AD-VENTA, would receive funding for the METAGENE™ hydrogen project. With a budget of EUR 1.2 million, the agencies AID and DGA are contributing at the maximum rate of 80%, amounting to almost EUR 1 million. The project runs for 30 months. In fumed silica, an additive for paints, adhesives and batteries, HPQ and PyroGenesis completed the transaction on September 29 under which they now each hold 50% of HPQ Silica Polvere. Commercialisation is progressing more cautiously, but initial talks with potential partners and customers are underway.

Volkswagen: Electric vehicles fill the order books, exceptional items weigh on results

Volkswagen presented nine-month results on October 29, shaped by special effects. Group revenue was EUR 233,378 million, compared with EUR 238,669 million a year earlier. The operating result fell to EUR 71 million, compared with EUR 5,408 million in the prior-year period. This was due to special effects of EUR 8.7 billion, of which EUR 7.8 billion arose in the third quarter. The largest item is the EUR 6.4 billion impairment of Porsche's goodwill, which does not entail a cash outflow. Without these charges, operating return on sales would be 3.8%. Cash flow in the automotive division, adjusted for corporate transactions, was around EUR 3.9 billion, compared with EUR 3.5 billion.

The Group had already lowered its forecast for 2026 on September 18. The operating return on sales is expected to be up to 1%, compared with the previous target of 4.0 to 5.5%. Electric vehicles are the bright spot. Orders for battery electric vehicles in Europe rose by 39%, and electric vehicles account for around 40% of the order backlog of roughly 1.1 million vehicles. Around 150,000 orders were received for the Electric Urban Car Family. If these orders translate into deliveries, this could support the margin. According to the Group, it currently earns less on electric vehicles than on sales of combustion-engine vehicles.

Volkswagen is also reorganising its business elsewhere. On September 7, the Group, investor Aurelius and the state of Lower Saxony signed key terms for the sale of Volkswagen Osnabrück GmbH. The site is to become a centre of excellence for security and defence solutions. The special effects also include costs for the planned sale. It would be the first time in decades that Volkswagen has parted with a car plant in Germany. Completion is subject to final agreements, governing body approvals and regulatory reviews. Volkswagen must nevertheless continue to plug gaps.

Conclusion

Silicon runs through the entire chain, and opportunities could follow. Intel is delivering strong figures through its data centres, but must resolve bottlenecks and bring the foundry out of the red. HPQ Silicon is securing its first orders in the defence sector with its silicon anode and could, with the ENDURA+ cell in North America, gain a foothold, should testing at Aptera succeed. It also has two other business models that are making progress. Volkswagen is filling the order books with electric vehicles, but is grappling with substantial one-off effects and a lowered forecast. If the restructuring succeeds, that could change. Demand for silicon is growing.