Intel Corp shares plunged as much as 14 percent in late trading after chief executive officer Lip-Bu Tan (陳立武) gave a lackluster forecast and warned that the chipmaker was struggling with manufacturing problems.
First-quarter projections for revenue and earnings fell well short of Wall Street estimates and a conference call with analysts, in which Tan said it would take “time and resolve” to turn around the company, sent the shares down further.
Production snags have hampered the comeback bid, a disappointment for investors who anticipated more of a boost from new products.
Photo: AFP
“We are on the multiyear journey,” Tan said.
Intel, the largest maker of personal computer processors, is suffering from low manufacturing yields — the percentage of usable chips coming out of its factories. That has made it harder to fill orders.
Demand is “quite strong” and the company is working hard to fix its manufacturing problems, Tan said in an interview.
However, Intel used up much of its inventory in the fourth quarter, he said.
“Our yield and production manufacturing are not up to my standards,” he said. “We need to improve that.”
Intel shares fell as low as US$46.75 in extended trading during the conference call.
The company would not have additional supply, particularly of lucrative server computer chips, until the end of the first quarter, Intel chief financial officer Dave Zinsner said on the conference call with analysts.
Intel has burned through its stockpiles and making more products will take several months, Zinsner said.
Supply would increase each quarter this year, he said.
Spending on new plants and equipment this year would be similar to last year, marking a shift from Intel’s recent efforts to cut its budget, but any boost in output from new machinery would not arrive until next year, he said.
Another challenge is that although demand for server chips is solid, the company cannot shift production toward that market too aggressively without hurting its PC customers, Zinsner said.
There is also concern that higher prices for memory chips would translate into more expensive laptops and weaker demand, Tan said.
After helping orchestrate the US government’s investment in August last year, US President Donald Trump recently touted the stock’s gains.
The shares have been the best performer on the Philadelphia Stock Exchange Semiconductor Index this month, adding to an 84 percent surge last year.
“There’s been a lot of optimism around Intel potentially turning a corner,” said Matt Bryson, an analyst at Wedbush Securities Inc. “Hearing that yields are difficult, that’s not a great start.”
First-quarter revenue would be US$11.7 billion to US$12.7 billion, the company said.
The midpoint of that range was lower than the US$12.6 billion estimated by analysts.
The company expects to break even in earnings per share (EPS), excluding certain items.
Wall Street had projected a profit of US$0.08 per share.
In the fourth quarter, revenue fell 4.1 percent to US$13.7 billion. Profit was US$0.15 per share, excluding some items.
Analysts had estimated sales of US$13.4 billion and EPS of US$0.09 on average, according to data compiled by Bloomberg.
Gross margin, the percentage of revenue remaining after deducting the cost of production, was 37.9 percent in the quarter on an adjusted basis. For the current period, that key measure of profitability would contract to 34.5 percent.
When Intel was at the height of its powers, it regularly reported margins north of 60 percent.
Zinsner said that current margins are “by no means acceptable.”
The Santa Clara, California-based company has a long way to go to restore its former chip-industry glory. Its annual revenue of US$53 billion last year was roughly US$25 billion shy of the company’s peak revenue, achieved in 2021.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
RSS