Intel, up 150% this year, plunges 30% in a single day

[Financial News, New York—Lee Byung-chul, Correspondent] Shares in U.S. semiconductor company Intel plunged 30% intraday on the 30th (local time), putting them at risk of posting their largest-ever one-day decline. The slump in its core PC market and the shutdown of a semiconductor plant in Israel combined to sharply worsen its earnings outlook. Intel’s market capitalization was expected to shed at least $146 billion (about 210 trillion won) in a single day.
According to CNBC, Intel forecast the previous day that its revenue for the fourth quarter of this year would be $15 billion to $16 billion, with adjusted earnings per share (EPS) of 25 cents. Those figures were well below market expectations of $17.1 billion in revenue and EPS of 43 cents.
The main reason for the weaker earnings outlook is the slump in the PC market. Intel’s PC semiconductor business, which accounts for about half of its revenue, is being hit by a sharp rise in memory prices. As memory makers focus on producing high-bandwidth memory (HBM) for artificial intelligence (AI), prices for PC memory have risen, weakening demand for PCs. Intel Chief Financial Officer (CFO) David Zinsner said, “The slowdown in the PC market will continue at least through the first half of next year.”
An explosion at a semiconductor plant in Israel also dealt a blow. The accident, which occurred early this month, killed two workers and seriously injured one. The plant shutdown disrupted shipments of 10-nanometer (nm) semiconductors, and revenue losses of about $600 million are expected over the next two quarters.
Intel shares had risen about 150% this year ahead of its earnings announcement, buoyed by expectations of growing demand for AI-related CPUs, but the outlook sent them sharply in the opposite direction. Massive investment in its foundry business is also weighing on cash flow.
Concerns about Intel’s financial health have also mounted. The premium on its five-year credit default swaps (CDS) rose to 124.75 basis points, its highest level ever. As of the end of September, it had $21.84 billion in cash and cash equivalents, compared with $46.32 billion in long-term debt.
Jay Goldberg, an analyst at Seaport Research Partners, said, “Intel is overproducing consumer semiconductors in the worst PC market while failing to produce enough semiconductors for AI servers,” and pointed out, “The problem is poor production planning.”



[email protected] Lee Byung-chul, Correspondent Reporter