Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Intel shares fell 17 per cent on Friday following a downbeat revenue outlook linked to supply constraints and issues in the launch of a new manufacturing technology that is critical to its turnaround.
The US chipmaker on Thursday said it expected between $11.7bn and $12.7bn in revenue for the quarter ending in March, undershooting Wall Street expectations of $12.6bn.
Intel acknowledged that a surge in demand late last year, particularly for chips used in data centres, had wrongfooted the company. It has also struggled to build up its new manufacturing process for high-end chips, known as 18A, which is a crucial stepping stone to reviving its manufacturing division.
Chief executive Lip-Bu Tan said he was “disappointed that we are not able to fully meet the demand in our markets”.
He said the company was “working aggressively to grow supply to meet strong customer demand” and he hailed the launch of its new personal computer chip built on 18A as an “important milestone”.
The share price drop came despite the company reporting revenue of $13.7bn in the quarter to the end of December, slightly ahead of Wall Street expectations of $13.4bn compiled by Visible Alpha.
The stock had rallied almost 50 per cent this year ahead of Thursday’s earnings report thanks to backing from US President Donald Trump and optimism around the new Panther Lake PC chip.
But Intel faces intense pressure to turn around its manufacturing business after pouring billions of dollars into an attempt to regain its position as the only US company capable of manufacturing the world’s most advanced chips, including those used for AI.
The chipmaker is trying to raise the “yield” from the 18A manufacturing process — the percentage of functional chips that roll off production lines.
Tan conceded that “while yields are in line with our internal plans, they are still below what I want them to be”.
The rollout of 18A has pushed up costs for the company in the short term, although Intel said the costs should fall as it started to manufacture chips on a larger scale.
Tan, who took over last year, has warned that the company could scrap its next-generation manufacturing technology, known as 14A, unless it is confident it can secure major customers such as Apple and Qualcomm.
On Thursday’s call with analysts, the Intel chief struck an upbeat tone, mentioning that a couple of “big customers” were in the process of testing 14A.
Tan told analysts he believed clients for 14A would “begin to make firm supply decisions starting in the second half of this year . . . extending into the first half of 2027”.
Intel’s efforts to provide a US alternative to Taiwan Semiconductor Manufacturing Company (TSMC) as a manufacturer of the advanced chips at the heart of the AI race have earned it backing from the White House.
Trump celebrated the launch of the US-made Panther Lake chip earlier this month and said the government had made “tens of billions of dollars” from the 10 per cent stake it agreed to take in Intel in August.
Following the US taking a stake, Intel also secured $2bn from SoftBank and a $5bn investment from Nvidia, which Intel said closed during the quarter.
Intel’s chipmaking business, known as the foundry, had $4.5bn in revenue, slightly above the $4.2bn expected.
The group reported a net loss attributable to shareholders of $591mn for the December quarter — worse than consensus estimates.
Intel also suffered from capacity constraints at TSMC, which the US group still relies on to make some of its chips.
Shortages of memory chips are biting across the industry as AI data centre builders gobble up the limited supply from a handful of key players — Micron, Samsung and SK Hynix.
Intel’s product division, which includes its PC and traditional non-AI data centre chip business — and represents the bulk of its revenue — reported $12.9bn in revenue for the quarter, ahead of the $12.7bn analysts had forecast. It continues to face tough competition in its PC chip design business from the likes of AMD and Qualcomm.
