Intel investors lost a good ounce of enthusiasm late Friday after the microchip giant announced another setback to its upcoming top-of-the-line processors, sending the company's stock crashing after the news.
The Santa Clara, California-headquartered group was among the worst-performing stocks on Friday, losing as much as 17 percent. Intel estimates a six-month delay in its seven-nanometer microchip processors, the company stated in its quarterly earnings report Thursday night. Shares of Intel (INTC) settled at $50.59, down $9.81, Friday.
Intel said that the production of its advanced processors will be deferred until 2022, after years of impediment getting its existing lineup of microchips on sale. The firm disclosed that it was exploring contingency measures like having third-party companies to make some of its products.
Intel chief executive officer Bob Swan told investors during a conference briefing late Thursday that the company's latest chip technology was six months behind schedule and that they may pay other manufacturers to build its chip designs. Swan said their engineers have identified a defect in their seven-nanometer chips that resulted in poor output performance.
The design and manufacture of its own desktop computer and server processors have given Intel an edge over its competitors for many years, and a move away from such infrastructure would boost smaller rival Advanced Micro Devices, which rallied 15 percent.
Intel posted a $5.1 billion profit, or $1.19 per share, compared with a $4.2 billion profit, or 92 cents per share for the year-ago period. The company's sales were up 20 percent to $19.7 billion from the year-ago period. Adjusted profit was pegged at $1.23 per share. Analysts estimated a $1.11 per share profit on $18.6 billion sales.
Intel's latest setback has put the group further behind microchip maker Taiwan Semiconductor Manufacturing, which is already churning out huge numbers of processors on a 5-nanometer size. Intel's existing high-technology processors are at a 10-nanometer scale. The processors' circuit widths are measured in nanometers, which are one-billionth of one meter. Tinier circuits equate to faster and more power-efficient chips.
Aside from the chip setback, Intel's guidance for the third quarter also came dimmer than anticipated, analysts noted. Intel estimates $18.2 billion in revenue, sliding 5 percent from the year before, and sees a $1.10 earnings per share, which would be around 22 percent of its annual decline.
Meanwhile, as Intel's current-generation 10-nanometer processors were held back by over two years, rival TSMC was shipping its equivalent 7-nanometer processors in large volumes to high-profile clients like Apple, Huawei, AMD, and Qualcomm.
