Intel slumps as potential foundry exit deepens investor gloom
Lip-Bu Tan said on Thursday he would further shrink Intel's workforce, halt work on two plants in Europe and slow another in Ohio, binning his ousted predecessor's strategy that relied on building costly facilities to restore its manufacturing edge.
The plan for such extreme measures follows a surprise second-quarter adjusted loss and a forecast for a bigger-than-expected loss in the third quarter.
The weakening financials pointed to more trouble for Intel after years of mismanagement eroded its PC and datacenter market share and left it with almost no presence in the AI market.
The disclosures "revive long-unanswered questions on the chances of success for its foundry business and...what the path forward is if Intel does not develop leading edge manufacturing capability," TD Cowen analyst Joshua Buchalter said.
"It's hard to understate the significance of this potential outcome in the context of the history of the semiconductor industry."
As part of its new strategy, Intel may reserve the advanced 18A manufacturing process for its products and proceed with its next-generation 14A only if it lands a major external customer commits, Tan told analysts on the post-earnings call.
The move could put $100 billion in assets at risk and deepen its dependence on rival TSMC (2330.TW), opens new tab, adding strain to margins already running at about half their historical highs.
"Intel Foundry is a big story and currently people are questioning how successful 18A is. A failure in 18A will be a broken story," said Hendi Susanto, portfolio manager at Gabelli Funds.
Intel was set to lose nearly $8 billion in market value, if current losses hold. Its current valuation of around $100 billion is less than half of Advanced Micro Devices' (AMD.O), opens new tab more than $260 billion.
The stock has lagged far behind rivals this year, rising 12.8% compared with AI darling Nvidia's (NVDA.O), opens new tab 30% gain and AMD's 34%. Intel trades at a 12-month forward price-to-earnings ratio of 42.55 versus 33.90 for Nvidia and 32.12 for AMD.
Since taking the helm in March, Tan has divested businesses, laid off employees and redirected resources as part of his strategic reset to revive the embattled chipmaker.
"There are no more blank checks," he wrote in a memo to employees on Thursday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
7 minutes ago
- Times
Big rise in UK bosses warning of extreme weather effects
The number of British companies warning of extreme weather has risen twentyfold since 2015. References to 'extreme weather' occurred just 35 times in filings made by companies on the FTSE 350 in 2015, according to an analysis of company records on Factset. In 2024 this figure had risen to 741 mentions, with 560 references to the phrase in filings by the 350 largest listed companies in the UK so far this year. Companies across a variety of industries have pointed to extreme or unusual weather events as a reason for faltering or unexpected sales. Last month Greggs warned that operating profits at the bakery chain could be 'modestly below' 2024 due to the heatwave in June, which boosted demand for cold drinks but reduced overall shopper numbers, causing a slowdown in sales growth in the first half of the year. Rio Tinto said in April that extreme weather events had affected operations at its Pilbara iron ore mine in Western Australia, though it added last month that production had recovered well since. However, the majority of the increase in references to extreme weather in company filings over the past decade came in the form of companies warning of the risks that such events might pose to their businesses in the future. Currys and Watches of Switzerland recently warned of the potential impact of extreme weather events in their full-year results. The luxury watch seller said that their increasing frequency could lead to significant disruption of retail showrooms, offices and distribution centres through flooding and strong winds, while the electricals retailer said extreme weather events could increase footfall for consumers seeking air-conditioning in some regions during heatwaves, but could also lead consumers to shop online more than in stores. The increasing prevalence of warnings about extreme weather is not specific to the UK either. Research by Sara Mahaffy, a managing director at RBC Capital Markets who runs the bank's sustainability strategy research, found that discussions of physical climate risks on earnings calls has hit new highs in 2025 in the US and Asia. She added that the increasing prevalence of references to extreme weather underscored a wider trend occurring across the private sector, in which a premium was increasingly being placed on adapting to climate change and its impacts, rather than just mitigating them. 'What we noticed when we looked at ESG [environmental, social, and governance] debt issuance and green bond issuance, the private sector is increasingly integrating adaptation as part of the eligible criteria,' Mahaffy said. 'For so long, so much of the focus was on mitigation and renewable energy, energy efficiency, but we're starting to see adaptation creep in more. As the private sector is feeling these impacts directly, they are taking the steps themselves to build resilience.'
The Independent
8 minutes ago
- The Independent
Apple... cinemas? Tech giant sues movie theater chain
Apple is suing another fruit-named company — Apple Cinemas — in an attempt to get the small theater company to change its name. Apple Cinemas has reportedly signed a lease to take over a historic cinema and a retail space in San Francisco that had previously been operated by AMC Theaters and CGV Cinemas. The purchase is part of Apple Cinema's overall goal of expanding to 100 locations across the country over the next 10 years. Apple entered a lawsuit on Friday in Massachusetts alleging that the theater company is infringing on its trademark and using its brand to trick consumers into thinking they're attending a cinema operated by the tech company. Apple does have a cinema division — Apple Studios — which it began in 2019, but Apple has been offering movie-adjacent entertainment since 1999 via its QuickTime Movie Trailers. The tech company also held cinema events, including some in connection with the Tribeca Film Festival. The cinema company began its operations in 2013 when it opened its first theater in Massachusetts. The company says its name is from it's initial plans to open its first theater in the Apple Valley Mall in New England, according to the Hollywood Reporter. The company primarily operated in the northeast until it laid out its plans to expand to San Francisco and other parts of the country in 2024. Sand Media — Apple Cinema's parent company — filed an application for the name "Apple Cinematic Experience" but was denied. A trademark examiner ruled that the name might cause confusion between Apple Cinemas and the tech company. Apple responded to that branding attempt by sending Sand Media a cease and desist letter. It further claims that Apple Cinemas began using a stylized apple for its logo and began focusing its expansion on malls and shopping centers where Apple Stores were already present. According to the lawsuit, the similar names resulted in landlords at these locations assuming that Apple Cinemas was affiliated with the tech brand. Apple alleges that Apple Cinemas was given favorable deals to open in some areas as a result of the presumed connection. Further driving the tech giant's lawsuit are claims that some customers have had negative experiences with Apple Cinemas. Some customers have complained that the theaters are "greasy," "dirty" and "grungy" and are at times beset by technical issues. 'Consumers should not go to an 'Apple Cinemas' theater thinking it is connected to the famous Apple brand, with all its goodwill and brand equity,' Miranda Means, an attorney representing Apple, stated in the lawsuit. Apple's goals with its lawsuit are to force the theater chain to stop using the word "Apple" in its name. It is also seeking damages, though the amount was unspecified.
Reuters
9 minutes ago
- Reuters
Trump set to fill Fed board vacancy by week's end, has narrowed chair search to four
WASHINGTON, Aug 5 (Reuters) - U.S. President Donald Trump said on Tuesday he will decide on a nominee to fill a coming vacancy on the Federal Reserve's Board of Governors by the end of the week, and had separately narrowed the possible replacements for Fed chair Jerome Powell to a short list of four. "I'll be making that decision before the end of the week," Trump said of his plans to name a replacement for Fed governor Adriana Kugler, who last week unexpectedly announced she was leaving as of this Friday to return to her academic position at Georgetown University. Trump, in comments to reporters at the White House, distinguished between picking Kugler's replacement for a term that only lasts until January, and the selection of Powell's replacement once he leaves the top Fed job in May. But with the Fed board's other seats occupied with people, including Powell, whose terms run for years longer, Trump's choice of Kugler's replacement could have implications for his selection of a chair, a process Trump said has been narrowed to economic adviser Kevin Hasset, former Fed governor and Trump supporter Kevin Warsh, and two other people. Trump did not name those people, but one is thought to be current Fed governor Christopher Waller. "We're also looking at the Fed chair, and that's down to four people right now ... Two Kevins and two other people," Trump said. Trump earlier in the day said in an interview with CNBC that he had removed Treasury Secretary Scott Bessent from consideration for Fed chair because Bessent wanted to remain in the top Treasury job. In the CNBC interview, Trump said Kugler's decision to vacate her seat early was a "pleasant surprise" that gives him an immediate opening to fill with a person who could also be promoted to take Powell's place. Kugler's replacement would, at least initially, by appointed for just the few months remaining in Kugler's term. But Trump could be explicit that he plans for that person to then be nominated to a full 14-year term after that time, and to also be his choice to replace Powell - giving his nominee several months and several policy meetings to begin to influence the policy debate. "A lot of people say, when you do that, why don't you just pick the person who is going to head up the Fed? That's a possibility too," Trump said in the CNBC interview. The president has been critical of Powell for not cutting interest rates since Trump returned to power in January, and contemplated trying to fire him, even as Fed policymakers balance evidence of both a slowing economy and a weakening job market against the fact that inflation remains well above the central bank's 2% target and is expected to move higher. The Fed is charged by Congress to maintain stable prices and maximum employment, and is potentially facing a situation where the two goals conflict with each other - posing a painful set of tradeoffs. The nominee to fill Kugler's seat will need to be confirmed by the Senate, and would require another Senate vote for a full 14-year term early next year. The nomination for the next Fed chief would require a separate Senate confirmation process. Kugler's departure was announced the same day that Trump, angered over data that showed job growth slowing in the first months of his administration, fired Bureau of Labor Statistics Commissioner Erika McEntarfer while alleging without evidence that BLS was manipulating the jobs data to make him look bad. Economists have warned since Trump returned to the White House in January that his combination of import tariffs and erratic trade policy would likely lead to a labor market slowdown and higher inflation, a broadly shared outlook that has been among the factors keeping the Fed from lowering rates until the inflation impact becomes clearer. The central bank last week held its policy rate steady in the 4.25%-4.50% range, though Waller dissented on the grounds that the inflation risk from tariffs appeared modest at best, while the job market and growth in general appeared to be weakening. The release on Friday of the jobs report for July, with weak monthly employment gains and downward revisions to prior months, appeared to validate those concerns and led to increased market bets the Fed would cut rates at its September 16-17 meeting. The firing of the BLS commissioner touched off a global wave of concern about the continued integrity of U.S. government data, with Trump's actions being given a fire-the-messenger interpretation by much of the economics and statistics community. The president's choice now to head the statistics agency and potentially to lead the Fed will be scrutinized all the more carefully, said Michael Strain, director of economic policy studies at the conservative American Enterprise Institute. "Imagine if one of your concerns is that there's a lackey in charge of the agency and the numbers are fake. That's ... another level of problems," Strain said of the BLS. "Maybe he sees this independence thing really matters. Maybe he's got somebody from the outside saying 'Look, Mr. President, if you appoint somebody who's perceived to be a lackey as the Fed chair, take the BLS freakout and multiply by 1,000."
