New York (CNN Business)Intel (INTC) was one of the worst-performing stocks Friday morning, falling as much as 18%, after the company announced its next-generation chips will be delayed.
The company expects a six-month delay in its 7-nanometer chip product, with initial shipments now slated for “late 2022 or early 2023,” Intel CEO Bob Swan said in a prepared statement Thursday night as part of quarterly earnings. Advanced Micro Devices (AMD), Intel’s competitor that already uses 7-nanometer products, rallied on Friday. The stock finished nearly 17% higher and was the best performer in the S&P.
By contrast, Intel closed 16% lower and was the weakest stock in the S&P 500 (SPX) and the Dow (INDU), as well as one of the weakest companies in the Nasdaq Composite (COMP). Intel’s Friday slump came as all three major US indexes ended lower, extending the prior session’s losses on a weaker-than-expected jobless claims report.”Intel had manufacturing issues with the 7-nanometer transistors, so there will be a delay in the release of the chips that include those transistors,” said David Madden, market analyst at CMC Markets.Read MoreAside from the product delay, Intel’s third-quarter guidance was also weaker than hoped for, analysts said. Intel expects sales of $18.2 billion, down 5% from the prior year, and predicts earnings per share at $1.10, which would be a 22% yearly decline.The company did beat analyst expectations for the second quarter, however.Intel’s shares are on track to put an end to a three-week winning streak, as big tech names have led the stock market’s resurgence after the pandemic selloff in March. Intel shares are up more than 15% from their low point in mid-March, for example.Market sentiment has been fizzling over the past few days as worries about the pace of the US economic recovery have resurfaced.
On top of that, US-China tensions are again on the rise after the US closed the Chinese consulate in Houston and China consequently closed the US consulate in Chengdu.As a company with exposure to China, Intel has in the past been sensitive to the relationship between Washington and Beijing, particularly during last year’s trade war.