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Factory Blast Hits Intel Q4 Forecast, Shares Tumble
29 Oct
Summary
- Intel forecasts lower Q4 revenue and profit due to a factory explosion.
- A PC market slowdown is expected to persist through the first half of next year.
- Shares dropped over 20% after the disappointing financial outlook.
Intel projected quarterly revenue and profit below Wall Street expectations on Thursday, with its shares falling more than 20% in extended trading. The company cited a factory explosion in Israel and a persistent slowdown in the PC market as key factors. These issues are expected to offset strong demand for its artificial intelligence server chips.
The Chief Financial Officer indicated that the PC slowdown is likely to continue at least through the first half of next year. In response to these challenges, Intel plans disciplined investments in capacity and working capital to support future growth.
The explosion at its Israel facility is estimated to have hurt fourth-quarter revenue by roughly $300 million and impacted gross margins by about 200 basis points. The facility was non-operational for two weeks, and the company is assessing salvageable wafers.
In the third quarter, Intel reported revenue growth of 21% to $16.51 billion, largely meeting expectations. However, sales in its PC chip business declined by 5%, missing estimates, highlighting ongoing concerns about demand stabilization in that segment.
