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Intel's Foundry Strategy Faces Key Test After 45% October Share Plunge
Intel's shares slid 45% in October, the steepest monthly drop on record, as pressure mounts on its foundry business.
Key points
- Intel's stock fell 29% on Friday, its worst day since the 1970s, after the company guided revenue $1 billion to $2 billion below analysts'
- Intel's data center business grew 78% from a year earlier to $7.3 billion in the third quarter.
- Intel said it is shifting some Oregon factory capacity from its 18A chips to Intel 3 wafers to meet data center demand.
Why it matters. Investors and prospective foundry customers will watch whether Intel lands a large-scale foundry customer, since an analyst said the stress on its economics could show more dramatically if it does not within a year.
Intel shares plunged 29% on Friday, their worst day since the 1970s, after the chipmaker guided quarterly revenue between $1 billion and $2 billion below analysts' estimates. The drop capped a 45% October slump, the steepest monthly fall on record, according to FactSet. Intel said it cannot make enough chips to meet demand, so it is shifting some Oregon capacity away from its advanced 18A chips.
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Intel's Foundry Strategy Faces Key Test After 45% October Share Plunge
Intel's stock fell 45% in October, its steepest monthly decline since the 1970s, as the outlook for the personal computer market worsened. The company's turnaround plan now depends on its foundry business, which manufactures chips for other firms. Customers are looking for evidence that Intel will add fabrication capacity and become a credible alternative to Taiwan Semiconductor Manufacturing Company, the industry leader. CEO Lip-Bu Tan has pushed the company's foundry effort, but reporting indicates it has yet to gain significant traction. Investors will be watching upcoming customer announcements and capacity plans closely.