Intel Chief Executive Officer Pat Gelsinger speaks during the Computex conference in Taipei, Taiwan, Monday, June 4, 2024. Gelsinger took to the stage at Taiwan’s Computex show to talk about new products that are expected to help the company reverse a streak of market share losses to peers, including AI leader Nvidia Corp. Photo by Annabel Chi/Bloomberg via Getty Images
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Intel The company’s shares fell the most in 50 years on Friday, to levels not seen since 2013, after the chipmaker reported a big profit miss and announced a major restructuring.
The stock fell 26% to $21.48 at the closing bell, the second-worst day in history for the company’s stock, behind a 31% drop in July 1974, three years after Intel’s IPO. The company’s market capitalization is now below $100 billion.
The dramatic sell-off caused the Nasdaq to fall 2.4%, and also dragged global semiconductor stocks lower. Taiwan Semiconductor Manufacturing Co., Ltd. Shares in Samsung Electronics, known as TSMC, closed down 4.6% in Taiwan, while Samsung was down more than 4% at the close of trading in South Korea. TSMC is the world’s largest chipmaker and Samsung is the world’s largest memory semiconductor company.
Inter’s numbers were bad across the board.
The company posted a net loss of $1.61 billion in the quarter, down from a net profit of $1.48 billion in the same period last year. LSEG said it earned adjusted earnings of 2 cents a share, well below analysts’ average estimate of 10 cents. Revenue also fell short of expectations.
Intel said it won’t pay a dividend for the fourth quarter of fiscal 2024 and cut its full-year capital spending forecast by more than 20%. The company said it would lay off more than 15% of its workforce as part of a $10 billion cost-cutting plan.
“This is Intel’s biggest restructuring since the memory-microprocessor transition 40 years ago,” Intel CEO Pat Gelsinger said in an interview with CNBC’s John Fort that aired Friday. “We have a bold plan to rebuild this company, and we’re going to follow through on it.”
Gelsinger said on a conference call with analysts that a decision to speed up production of Core Ultra chips for PCs that can handle artificial intelligence workloads contributed to the loss. The company said pricing was more competitive than planned during the quarter as AMD, Qualcomm and other companies strive to grab market share from Intel, which is lagging far behind its rivals in the AI wars.
Gelsinger wrote that the job cuts will mostly occur this year. NoteThis is the largest single job cut listed on industry tracking site Layoffs.fyi, which has been running since March 2020.
Compete on merit
Adding further pressure to the chip industry is information AI chip manufacturer NVIDIA It is the subject of an antitrust investigation by the U.S. Department of Justice.
The Department of Justice is investigating allegations that the company abused its dominance in the AI market, The Information reported.
In response, an Nvidia spokesman said the company “won on merit.”
“We compete based on decades of investment and innovation, strictly comply with all laws, and make NVIDIA openly available to any company on any cloud and on-premise, allowing customers to choose the solution that’s best for them,” the spokesperson said.
The spokesperson added that Nvidia is “willing to provide any information required by regulators.”
CNBC also reached out to the Department of Justice about the report.
Samsung rival SK Hynix, which supplies Nvidia, also fell sharply, closing down more than 10%. Selling also continued in Europe. ASMLThe company sells key tools needed to manufacture cutting-edge chips. STMicroelectronics and Infineon.
The VanEck Semiconductor ETF, which includes the sector’s leading stocks, also fell 5.5% on Friday after plunging 6.5% the previous day.
clock: Why Intel faces a tough road ahead
