Why Intel and AMD stocks fell today

What happened

Actions of both Intel (NASDAQ: INTC) and Advanced micro appliances (NASDAQ: AMD) sank at the beginning of trading on Monday and remained in the red at 13:00 EST – down 3% and 3.2%, respectively.

The declines come in response to a Wall Street Journal report over the weekend that Amazon.com and Microsoft follow Alphabetand AppleLeads and designs custom computer chips for better performance with their software and devices.

Shiny semiconductor chip

Image source: Getty Images.

So what

Moore’s law, he says diary, is starting to lose relevance as Intel and AMD customers stop focusing entirely on faster processors (and these gains become harder to achieve) and try to change their chip designs to get rid of them less heat and lower energy consumption. This “pursuit of improved performance and lower costs” “changes the balance of power in the industry.”

In particular, Alphabet, Amazon and Microsoft are developing chips designed to make artificial intelligence better, while the Apple M1 chip (and its expected successors) is designed to improve the performance of Apple devices.

Now what

Whatever their specific reasons, the result is that customers several times larger than chip makers in market capitalization now have the financial means to design custom chips indoors and then hire contract chip makers. Taiwan Semiconductor Manufacturing, among other things, to make the effective manufacture of chips for them. While so far, “the lost business for traditional chip producers has been modest,” WSJ, is heading towards this trend and which could be reached, which makes Intel and AMD investors feel nervous.

In this regard, owners of AMD shares that trade 130 times the earnings seem to have much more to lose than those who own Intel shares that cost less than 10 times the gains.