Intel shares plunge as chipmaker suffers manufacturing woes, inventory shortages
Intel Struggles to Meet Demand for AI Chips, Shares Plunge
Intel saw a sharp drop in shares, falling by as much as 17% on Friday, as the chipmaker acknowledged challenges in meeting demand for its high-powered AI chips.
The Santa Clara, Calif.-based company, known for producing chips used in data centers, is undergoing a turnaround effort to take advantage of the growing demand from tech giants requiring chips and servers for the artificial intelligence boom.
During an investor call, Intel executives, including CFO David Zinser, admitted that supplies had been strained due to underestimating demand.
Zinser mentioned that shortages are expected to continue in the first quarter but should improve by mid-year.
“The server cycle seems real, but the company appears to have woefully misjudged it with its capacity footprint caught massively off guard,” analysts at Bernstein noted.
In the fourth quarter, Intel reported a net loss of $333 million, surpassing Wall Street’s expectations.
The company foresees a loss of 21 cents per share in the first quarter as it increases spending to address the shortfall.
This disappointing outcome represents a setback for Intel, whose shares had surged 84% in the previous year, partly due to optimism from major investments by the US government, investment giant SoftBank, and Nvidia.
Intel has been grappling with low manufacturing yields, which refer to the number of viable chips produced at its facilities.
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