Intel Shares fell by probably the most in 50 years on Friday, reaching levels not seen since 2013, after the chipmaker reported a giant drop in profits and announced an enormous restructuring.
The stock fell 26 percent to $21.48 on the close. It was the second worst day for the stock, only surpassing the 31 percent drop in July 1974, three years after Intel's IPO. The company's market capitalization is now under $100 billion.
The dramatic sell-off contributed to a 2.4 percent decline within the Nasdaq and dragged down global semiconductor stocks. Taiwan Semiconductor Manufacturing Co. – often called TSMC – closed 4.6% lower in Taiwan, and Samsung lost greater than 4% at the top of the session in South Korea. TSMC is the world's largest chipmaker, while Samsung is the world's largest maker of memory semiconductors.
Intel's numbers were bad across the board.
The company posted a net lack of $1.61 billion, after reporting net income of $1.48 billion in the identical period last yr. Adjusted earnings per share of two cents were well below the typical analyst estimate of 10 cents, in response to LSEG. Revenue also fell in need of expectations.
Intel announced it should not pay a dividend within the fourth quarter of fiscal 2024 and cut its full-year capital spending forecast by over 20%. The company said it should lay off greater than 15% of its employees as a part of a $10 billion cost-cutting plan.
“This is the most comprehensive restructuring of Intel since the shift to memory microprocessors four decades ago,” Intel CEO Pat Gelsinger said in an interview with CNBC's Jon Fortt that aired Friday. “We have embarked on a bold path to transform this company, and we will get it done.”
The decision to provide faster Core Ultra PC chips that may handle artificial intelligence workloads contributed to the loss, Gelsinger said on a conference call with analysts. The company said pricing was more competitive than planned within the quarter as AMD, Qualcomm and other corporations worked to take market share from Intel, which has fallen far behind its rivals within the battle for artificial intelligence.
The job cuts will mainly happen this yr, Gelsinger wrote in a memoIt is the biggest single job cut listed on Layoffs.fyi, an industry tracker that has been lively since March 2020.
Competition based on performance
A report by The information this AI chip manufacturer NVIDIA is the topic of an antitrust investigation by the US Department of Justice.
The U.S. Department of Justice is investigating complaints that the corporate abused its dominant position in the factitious intelligence space, The Information reported.
An Nvidia spokesperson responded that the corporate “wins on merit.”
“We are competitive because we have invested in investments and innovations over decades, scrupulously comply with all laws, make NVIDIA openly available in any cloud and on-premises to any company, and ensure that customers can choose the best solution for them,” the spokesman said.
The spokesperson added that Nvidia is “happy to provide any information requested by regulators.”
CNBC has also contacted the US Department of Justice regarding the report.
Samsung's competitor SK Hynix, which supplies the US giant Nvidia, also fell sharply, closing greater than 10 percent lower. In Europe, the sell-off continued. Shares of ASMLwhich sells necessary tools for the production of cutting-edge chips, fell together with STMicroelectronics And Infineon.
The VanEck Semiconductor ETF, which incorporates big names within the sector, fell 5.5% on Friday after plunging 6.5% a day earlier.
REGARD: Why Intel faces a difficult road ahead
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