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Intel (INTC) Stock Tanks 12% Despite Good Q2 Results Due to Delay in Launching New Chips

UTC by Bhushan Akolkar · 2 min read
Intel (INTC) Stock Tanks 12% Despite Good Q2 Results Due to Delay in Launching New Chips
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Intel discovered a flaw in the manufacturing of its 7-nm chips that resulted in low-yield output. INTC stock is down.

On Thursday, July 23, computing chip giant Intel Corporation (NASDAQ: INTC) announced its Q2 2020 results beating street estimates. Intel reported earnings of $1.23 per share against the expected $1.11 per share. Similarly, the company’s revenue stood at $19.73 billion against the expected $18.55 billion.

Despite the better-than-expected results, Intel shares tanked 10% on Thursday after the company announced its guidance for the next quarter. Intel said that it expects $1.10 per share of earnings and $18.2 billion for the third fiscal quarter. A year back, Intel decided not to give full-year guidance, however, it still announced its forecast for the full year.

Intel predicts $4.85 per share of adjusted earnings for 2020 with a revenue of $75 billion. This is more than its estimated revenue of $73.5 billion announced in January this year.

On Thursday, Intel stock was trading at $60.40 (-1%) with a market cap of $255 billion. Additionally, Thursday’s fall also comes as the chip-making giant delays the launch of its 7nm CPU. Today, in the pre-market, the stock is trading at $52.95 (-12.33%).

Intel Delays the Launch of 7-nm Intel CPUs Despite Good Q2 2020

Intel has been flexing its muscles to launch its high-performance 7-nm chips in the market. However, the company recently discovered an issue in the manufacturing that ultimately resulted in a low-yield of flawless chips. As per the earlier schedule, Intel was to launch its 7-nm chips next year in 2021. In an official statement, the company said:

“The company’s 7nm-based CPU product timing is shifting approximately six months relative to prior expectations. The primary driver is the yield of Intel’s 7nm process, which based on recent data, is now trending approximately 12 months behind the company’s internal target.”

Intel competitor AMD already has its 7-nm chips available in the market. Thus, Intel’s delay to launch the 7-nm chips could significantly result in losing a major market share to AMD. On the other side, Intel said that it is currently ramping up production for its 10-nm chips that are seeing huge demand. During a conference call with analysts, Intel CEO Bob Swan said:

“We will continue to invest in our future process technology roadmap but we will be pragmatic and objective in deploying the process technology that delivers the most predictability and performance for our customers, whether that be on our process, external foundry process, or a combination of both.”

The Intel stock has recovered all its year-to-date losses during the March 2020 market crash.

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