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Intel shares dropped as much as 12 per cent on Thursday after the US chipmaker gave a downbeat revenue outlook, blaming supply constraints for limiting its chip output and hampering growth.
The Santa Clara, California-based company reported revenue fell 4 per cent to $13.7bn in the quarter to the end of December compared with last year, slightly ahead of Wall Street expectations of $13.4bn compiled by Visible Alpha.
But Intel said it expected between $11.7bn and $12.7bn in revenue for the quarter ending in March, with a midpoint below the $12.6bn expected by Wall Street.
Chief executive Lip-Bu Tan said: “I’m disappointed that we are not able to fully meet the demand in our markets.”
He said the company was “working aggressively to grow supply to meet strong customer demand” and hailed the launch of its new personal computer chip as an “important milestone”.
Intel shares, which have surged nearly 150 per cent over the past year after backing from President Donald Trump, were boosted this month by the launch of the new Panther Lake PC chips. The stock dropped in after-hours trading in New York on Thursday.
Trump celebrated the launch of the US-made chip, and said the government had made “tens of billions of dollars” from the 10 per cent stake it agreed to take in Intel in August.
However, the chipmaker faces pressure to turn around its manufacturing business after investing billions of dollars in a push to lure big customers such as Apple and Nvidia away from Taiwan Semiconductor Manufacturing Company. Nvidia made a $5bn investment in Intel last year.
The chipmaker has struggled to build up its new 18A manufacturing process and is trying to raise the “yield” — the percentage of functional chips that roll off production lines.
Tan said “while yields are in line with our internal plans, they are still below what I want them to be”.
Intel meanwhile depleted much of its chip inventory in late 2025 and is going into 2026 “very lean”, the company said.
At the same time, Intel relies on rival TSMC to make some of its chips, which is also struggling to boost capacity to meet demand.
Shortages of memory chips are also biting across the industry as AI data centre builders gobble up the limited supply from a handful of key players — Micron, Samsung and SK Hynix.
Intel’s foundry business had $4.5bn in revenue, slightly above the $4.2bn expected. The group reported a net loss attributable to shareholders of $591mn for the December quarter — worse than consensus estimates.
Intel’s product division, which includes its PC and traditional non-AI data centre chip business — and represents the bulk of its revenue — reported $12.9bn in revenue for the quarter, ahead of the $12.7bn analysts had forecast. It continues to face tough competition in its PC chip design business from the likes of AMD and Qualcomm.