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Fitch Downgrades Intel's Credit Rating, Citing Heightened Competition
4 Aug
Summary
- Fitch downgrades Intel's credit rating to BBB from BBB-plus
- Intel faces growing competition from rivals like NXP, Broadcom, and AMD
- Intel needs to ramp up PC shipments and reduce debt to recover ratings
According to a recent report by Fitch Ratings, the credit rating agency has downgraded Intel's credit rating by one notch, from BBB-plus to BBB, placing it just two notches shy of junk credit status. This downgrade reflects Fitch's assessment that the Santa Clara, California-based chipmaker is facing heightened challenges in maintaining demand for its products.
Fitch cited the growing competition Intel faces from peers such as Dutch rival NXP Semiconductors, Broadcom Inc., and Advanced Micro Devices (AMD) as a key factor behind the downgrade. The ratings agency warned that Intel's credit metrics remain weak and will require stronger end markets, successful product ramps, and net debt reduction over the next 12-14 months for the company to recover its previous ratings.
While Intel still enjoys a strong market position in the provision of PCs and traditional enterprise servers, Fitch noted that the company faces heightened PC competition from Qualcomm and AMD. To regain its previous credit ratings, Intel will need to ramp up its PC shipments while also reducing its balance sheet debt.
Fitch described Intel's liquidity profile as "solid," with a mix of cash, cash equivalents, and short-term investments, as well as an untapped $7 billion credit revolver and a $5 billion, 364-day revolver that will come due in January 2026. However, the ratings agency cautioned that Intel's financial structure is relatively weaker compared to its similarly rated peers and faces "higher execution risk."
