Intel (INTC-US(Archyde.com) – Dismal first-quarter earnings forecasts spooked Wall Street, triggering a pre-market slump in chipmaker shares Friday and prompting some analysts to express concern regarding their cash position amid the semiconductor downturn.
Intel shares fell 10 percent in premarket trading on Friday following Intel forecast an unexpected loss for the quarter and provided a revenue forecast of $3 billion lower than expected.
Intel supplier KLA Corp (KLA-US) fell more than 5 percent following its downbeat earnings forecast, while Advanced Micro Devices (AMD-US)、Nvidia (NVDA-US)、Applied Materials (AMAT-US) and Qualcomm (QCOM-US) fell between 0.8% and 3.2%.
The forecasts put Intel on track for its worst quarter on record and underscore the challenges Chief Executive Pat Gelsinger faces as PC demand slumps and data center growth slows in the wake of the pandemic.
“There are no words to describe or explain Intel’s historic collapse,” said Rosenblatt Securities analyst Hans Mosesmann, one of 16 analysts who cut their price targets on the stock.
Once the dominant player in the PC and data center markets, Intel has been steadily losing market share to rivals such as AMD, which uses TSMC (TSM-US)(2330-TW) and other chip foundry manufacturers with advanced process chips, surpassing Intel in terms of technology.
Some analysts said that even if the data center market may bottom out in the second half of 2022, Intel is at a disadvantage because it will lose more market by then.
“AMD’s Genoa and Bergamo chips offer strong price/performance advantages over Intel’s Sapphire Rapids processors, which should further boost AMD’s market share,” said YipitData analyst Matt Wegner.
Intel’s performance is also expected to significantly reduce the company’s available cash flow, while Gelsinger is trying to revive the business by expanding the foundry business and building new factories in the United States and Europe.
“It’s now clear why Intel needed to cut so many costs, as the company’s original plans proved to be fanciful,” the Bernstein analyst said.
