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Intel Corporation (NASDAQ:INTC) and Micron Technology, Inc. (NASDAQ:MU) are both well-known computer chip manufacturers that have large followings on Seeking Alpha. Previous to this, I have written 21 articles on Intel and 20 on Micron.

Although operating in different chip areas, both INTC and MU build their own fabrication plants (FABS). Intel builds mainly CPU and CPU-related chips and Micron mainly memory chips.

Both companies have been around for decades with INTC being founded 53 years ago in 1968 and Micron 43 years ago in 1978. While Intel headquarters are in Silicon Valley at Santa Clara CA, MU was founded in and remains in potato country Boise, Idaho. One of MU's original investors was potato billionaire J. R. Simplot.

With the ongoing worldwide chip shortage continuing, both companies are in the midst of expansion efforts to meet the new demand.

In this article, we will compare the two to determine the best investment choice going forward.

Intel is certainly better known than MU. Who among us have not seen the ubiquitous badge "Intel Inside" dozens or hundreds of times over the last 30 years.

Intel

Micron, on the other hand, is not as well known to the public but would most likely be found "Inside" most of the computers that have "Intel Inside". Micron manufactures not only RAM (Random Access Memory, but ROM (Read Only Memory), SSD's (Solid State Drives) among many other memory devices.

Another difference that must be noted is just the sheer size of the two companies. Intel has 110,00 employees and revenue of $78 billion in the last 12 months while Micron's comparables are 40,000 employees and $30 billion in revenue. In terms of assets, Intel has $153 billion worth and Micron has $54 billion.

But perhaps most importantly, Micron's revenue since 2015 is shown to be cyclical while Intel's has increased every year.

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I have written about MU's cyclicality before "Micron Stock Forecast: Can It Hit $100? Yes The Next Cyclical High Is $120. ".

When you look at the two companies' financial metrics several items stand out in Intel's favor (red) vs Micron's (yellow).

The first item is the huge Gross Margin (56%) advantage Intel has compared to MU's 40%, although 40% is good too.

The next two are ratios. Intel is selling at a 10.7 PE ratio and a 13.4 FCF (Free Cash Flow) ratio compared to Micron's 15.1 and 27.9 respectively.

Thus strictly on a price basis, Intel looks considerably cheaper than Micron.

However, Micron has something rarely seen in large manufacturing companies: they have more cash than long-term debt. This gives Micron a rare negative Debt/EBITDA ratio.

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So strictly on a financial basis, you would have to say Intel looks stronger than Micron but that is also true of most companies when compared to Intel.

In a world of chip shortages, both Intel and Micron should do well in the future. From your doorbell and garage door opener to your laptop and car, to 5G and Quantum computers, chips will be needed everywhere.

If every one of the 7.4 billion humans on earth requires just 140 chips in his/her life that's a trillion new chips.

So chip manufacturers like Intel and Micron should both do well in the coming decade. If we look at the two companies stock price over the last 5 years we see something interesting - a big jump in price for MU beginning in late 2020 but not much for INTC. In the 5 year period shown in the chart MU is up an impressive 338% while Intel comes in at a sluggish 51% although INTC did pay another $5.90 in dividends.

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The reason for the price jump is easy to see if you look at Micron's revenue over that same period up 43% in less than 12 months.

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What the above chart shows is the cyclical nature of Micron's business with revenue up significantly then down in the most recent quarter. As an investor you should ask yourself is there another 40% jump in revenue likely in the near future?

When looking at the investment merits of Intel and Micron you need to consider where they are now compared to where they are going. The above charts show that Micron has done extremely well especially over the last 18 months. The question is can they continue the revenue growth at the same rate as shown above.

Intel, on the other hand, shows massive cash flows that should support future growth. But Intel is on a new path of building FABs and manufacturing chips for other third parties. Since the future looks like we will need chips in the trillions, this should provide Intel with a long-term very profitable revenue source.

In fact, Intel just announced that is going to build 2 FABs worth $20 billion in Columbus, OH. They may expand that to 8 FABs on 2,000 acres. So if 2 FABs cost $20 billion 8 FABs would probably cost $100 billion with inflation.

That is an investment league Micron cannot compete in.

Intel will also be involved in what are basically two large duopolies, X86 chips with Advanced Micro Devices (NASDAQ:AMD) and third-party chip production with Taiwan Semiconductor Company (NYSE:TSM).

Then you have the political tailwinds encouraging chip manufacturing here at home as opposed to Asia especially China. That should benefit Intel immensely.

Combine all of those factors and Intel's much lower Price to Earnings ratio and Price to Free Cash Flow ratio and I think, at this time, Intel is the best investment choice especially if you have a 5 year or longer investment horizon.

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Intel Vs. Micron Technology: Which Semiconductor Stock Is The Better Buy? - Seeking Alpha