Intel Corp, the biggest computer-chip maker, fell 2.2 percent in NASDAQ Stock Market trading after a Morgan Stanley analyst said price cuts may drag down profit.
Intel and rival Advanced Micro Devices Inc may face a supply glut and a price war, New York-based analyst Mark Lipacis wrote in a research note on Wednesday.
Investors should sell the stocks "ahead of what we expect will be an inventory correction and increasingly aggressive price environment," he said. "The risk is high that Intel reacts to AMD's increased competitiveness with aggressive price cuts."
Lipacis, in his previous job at Prudential Equity, was one of the first analysts to predict that new products from Advanced Micro would allow it to steal market share from Intel and damage the larger company's profits last year. This year, Intel has snatched back orders with new chips, leading many analysts to predict that earnings will improve this year.
Of the 37 Intel analysts tracked by Bloomberg, Lipacis is one of only three that has a "sell" or equivalent recommendation on the stock. He has "underweight" ratings on both Intel and Advanced Micro, saying they will trail the rest of the semiconductor industry for the next six to 12 months.
Intel and Advanced Micro have built production capacity that exceeds market demand, Lipacis wrote. That, and Advanced Micro's losses, mean that the two companies are likely to cut prices to try to hang on to orders, he said.
Intel fell US$0.57 to US$25.81 at 4pm New York time. Advanced Micro rose US$0.03 to US$13.23 on the New York Stock Exchange.
Advanced Micro is Intel's only remaining rival in the market for personal-computer microprocessors, the main component in devices ranging from laptops to servers.
The market share battle, which saw Advanced Micro end last year at an 11-year high, led to a 42 percent drop in Intel's profit last year. Intel's gross margin, the percentage of sales remaining after deducting costs of production, was 46.95 percent in the second quarter, the narrowest since the third quarter of 2001.
Separately, Citibank analyst Glen Yeung said yesterday that both companies may earn less than expected in the fourth quarter because of a slowdown in US consumer spending. Intel is scheduled to report its third-quarter results and give forecasts for the fourth on Oct. 16.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS