Before this pandemic started, Intel (NASDAQ: INTC) had been doing incredibly well for itself. The company reported record-high revenue figures earlier this year, impressing Wall Street analysts in the process. Unfortunately, things seem to have taken a turn for the worse with the chipmaker. Intel announced before the weekend that the company would end up delaying the launch of its next generation of chips. Shares ended up tanking in response to this news, sending the stock falling in one of its worst single-day declines in history.
Intel went on to say that it was delaying the production of its 7-nanometer chips by at least six months. Even worse, the company went on to say that it is considering using a third-party manufacturer to make them. For the once-great chipmaker, having to resort to using another company’s manufacturing services is a big fall from grace.
As to be expected, the news was met with a flurry of analyst downgrades. “From here we see things growing increasingly painful as 7-nm delays are likely to overshadow anything good they can put forth, while magnifying any negative events, all while they fight an existential conflict with themselves as they attempt to figure a way out of the hole they have dug,” said Bernstein analyst Stacy Rasgon in response to the news. He considered this announcement to be one of the worst in Intel’s entire history since he has covered the stock.
Other analysts, such as Ross Seymore from Deutsche Bank and Vivek Arya from Bank of America, both downgraded the stock. The big problem with this delay from Intel is that it makes it almost impossible for Intel to end up catching up to, or even surpassing its competitor chips. A six-month delay is a pretty big setback in the cutting-edge, high-tech world of chip development.
In response to the news, shares of Intel ended up plunging around 16.3% on Friday’s trading session. In contrast, competitor Advanced Micro Devices (NASDAQ: AMD) shot up by around 17% as its main competitor floundered. While the competition between the two chipmakers has always been intense, it seems like AMD is pulling out on top at the moment. It’s hard to say whether or not Intel will be able to recover from this major setback anytime soon, or if that’s even a possibility at this point.
Intel Company Profile
Intel is one of the world’s largest chipmakers. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It is also the prime proponent of Moore’s law for advances in semiconductor manufacturing. While Intel’s server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has declined. These include areas such as the Internet of Things, memory, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, recently acquiring Altera, Mobileye, Nervana, and Movidius in order to assist its efforts in non-PC arenas. – Warrior Trading News
