Intel Shares Down After 7nm Chip Delay; 2Q Earnings, Revenue Beat
July 24 2020 - 8:50AM
Dow Jones News
By Michael Dabaie
Intel Corp. shares were down 13.5% premarket to $52.27.
The company after the market close Thursday reported
second-quarter revenue of $19.7 billion, up from $16.5 billion and
above FactSet consensus for $18.5 billion.
Adjusted EPS was $1.23, beating FactSet consensus for $1.11.
The company also said it shifted its seven-nanometer-based CPU
product timing about six months relative to prior expectations. The
primary driver is the yield of Intel's 7nm process, which is now
trending about 12 months behind the company's internal target.
"We have identified a defect mode in our 7-nanometer process
that resulted in yield degradation. We've root caused the issue and
believe there are no fundamental roadblocks, but we have also
invested in contingency plans to hedge against further schedule
uncertainty," Chief Executive Robert Swan said in the company's
conference call.
Raymond James said in an analyst note that "our view is that
outsourcing has now become inevitable. By outsourcing leading edge
technology, presumably to ... INTC would give up what has been its
main source of competitive advantage for 50 years and compete only
on architecture, which we don't think is enough to maintain the
dominant market share and premium margins that are now
expected."
J.P. Morgan said that although the announced six-month delay in
Intel's 7nm process was a disappointment, it believes the executive
team has made a strategic decision that they will no longer hold
back their product leadership, roadmaps and new product
introductions on manufacturing delays and that they already have a
strong contingency plan in place to move to an outsourced
manufacturing model.
Write to Michael Dabaie at michael.dabaie@wsj.com
(END) Dow Jones Newswires
July 24, 2020 08:35 ET (12:35 GMT)
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