by Aditya Soni
(Reuters) – Five of the world’s biggest microchip makers were wiping nearly $15 billion off market valuations on Friday after Intel’s disappointing forecast fueled fears of a computer market slump personal.
Intel warned that it could suffer an unexpected loss in the first quarter and expected quarterly revenue to fall below analysts’ forecasts, the group also facing slowing growth in the data center sector.
On the New York Stock Exchange, Intel shares fell 10% in early trading.
In the aftermath, competitors like Advanced Micro Devices (-1.5%), Nvidia (-0.5%), Applied Materials (-2.6%) and Qualcomm (-1.19%) were all in the red. .
Intel’s supplier, KLA Corp, fell 6.3% after also publishing forecasts deemed disappointing.
“No words can portray or explain Intel’s historic collapse,” said Hans Mosesmann of Rosenblatt Securities, who is among 21 analysts who cut their price target on the stock.
Intel’s bleak outlook underscores the difficulties facing Chief Executive Pat Gelsinger, who is trying to reestablish the group’s hegemony over the chip business by expanding outsourcing and building new factories in Europe and the United States. United.
Intel has been steadily losing market share to rivals like AMD, which has brought in other contract manufacturers like TSMC to build better performing chips.
“We’ve lost market, we’ve lost momentum. We think that’s leveling off this year,” Pat Gelsinger said on a conference call with investors.
Intel’s market share in the PC and server market has fallen from over 90% in 2017 to over 70% currently, according to data from research firm IDC.
That of AMD rose from 1% to 13% and the market capitalization of the group, led by Lisa Su, is now approaching that of Intel at around 120 billion dollars.
AMD will release its results next Tuesday.
“The magnitude of the deterioration [pour Intel, ndlr] is staggering and raises concerns for the company’s cash flow going forward,” Bernstein analysts said.
Intel, which plans to cut costs by $3 billion this year, generated $7.7 billion in cash from operations in the fourth quarter and paid a dividend of $1.5 billion for the period.
While the group’s capital expenditure is estimated at $20 billion in 2023, analysts believe Intel should consider cutting its dividend.
(Reporting by Aditya Soni, Nivedita Balu, Chavi Mehta and Medha Singh in Bangalore; Jane Manhee in Oakland, Blandine Hénault for the French version, editing by Kate Entringer)
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