Intel’s share price plunge drags down global chip stocks such as TSMC and Samsung

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Intel Corp. Chief Executive Officer Pat Gelsinger speaks during Computex in Taipei, Monday, June 4, 2024. Gelsinger took the stage at Computex to introduce new products that he expects will help reverse a trend in which its market share has lagged behind peers, including artificial intelligence leader Nvidia Corp. Photographer: Annabelle Chih/Bloomberg via Getty Images

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Intel On Friday, the chipmaker reported its biggest drop in 50 years, with its shares falling to their lowest level since 2013. Failure to achieve significant profits And announced a major restructuring.

At the close, shares plunged 26% to $21.48. It was the second-worst day ever for the company’s stock, behind only a 31% drop in July 1974, three years after Intel went public. The company’s market value is now below $100 billion.

The sharp sell-off sent the Nasdaq down 2.4% and dragged down global semiconductor stocks. Taiwan Semiconductor Manufacturing Company TSMC closed down 4.6% in Taiwan, while Samsung closed down more than 4% in South Korea. TSMC is the world’s largest chipmaker, while Samsung is The world’s largest memory semiconductor company.

Intel’s overall performance was poor.

The company reported a net loss of $1.61 billion this year, compared with a net profit of $1.48 billion in the same period last year. Adjusted earnings per share were 2 cents, well below the average analyst estimate of 10 cents, according to the London Stock Exchange. Revenue also fell short of expectations.

Intel said it will not pay a dividend in the fourth quarter of fiscal 2024 and cut its full-year capital spending forecast by more than 20%. The company said it would cut more than 15% of its workforce as part of a $10 billion cost-cutting plan.

“This is the most significant restructuring of Intel since the memory microprocessor transition four decades ago,” Intel CEO Pat Gelsinger told CNBC’s Jon Ford in an interview that aired Friday. “We have a bold plan to rebuild this company, and we will get it done.”

The decision to speed up production can handle AI Gelsinger said on a call with analysts that workloads were one reason for the loss. The company said pricing was more competitive than planned in the quarter because AMD, Qualcomm and others have been struggling to take market share from Intel, which has fallen far behind its rivals in the battle for artificial intelligence.

Kissinger in an article memorandumThis is the largest single layoff listed on Layoffs.fyi, an industry tracking website that has been operating since March 2020.

Compete on strength

The pressure on the chip industry comes from information AI chip makers Nvidia It is the subject of an antitrust investigation by the U.S. Department of Justice.

The U.S. Department of Justice is investigating complaints that the company is allegedly abusing its market dominance in artificial intelligence, The Information reported.

In response, an Nvidia spokesperson said the company “won on merit.”

“We compete with decades of investment and innovation, strictly comply with all laws, make NVIDIA openly available on every cloud and on-premises in every enterprise, and ensure customers can choose the solution that works best for them,” the spokesperson said.

The spokesperson added that Nvidia is “glad to provide any information regulators require.”

CNBC also reached out to the U.S. Department of Justice about the report.

Samsung rival SK Hynix, which supplies U.S. giant Nvidia, also saw its shares fall sharply, closing down more than 10 percent. European stocks continued to fall. ASMLThe company, which sells key tools needed to make cutting-edge chips, also saw its shares fall. STMicroelectronics and Infineon Technologies.