Intel shares plunge 23% after weak forecast as chip supply shortages threaten growth

# Intel Shares Slide 23% as Manufacturing Challenges and Weak PC Demand Pressure Outlook

Intel shares tumbled nearly 23% in after-hours trading Thursday after the semiconductor manufacturer warned that production bottlenecks, higher manufacturing costs and weakening personal computer demand could continue to weigh on its business into 2027.

The decline came despite stronger-than-expected third-quarter profits. Intel reported revenue of $16.5 billion, representing a 21% increase compared with the same period last year. However, investors focused on the company’s weaker outlook for the final quarter and its warning that it does not expect to generate positive cash flow this year as it continues investing in manufacturing expansion.

Intel projects fourth-quarter revenue of between $15 billion and $16 billion, falling short of analysts’ expectations of $17.07 billion. The forecast reflects the difficulties the company faces in meeting customer demand while managing rising expenses and expanding production capacity.

Manufacturing constraints have prevented Intel from supplying enough chips to meet orders. Meanwhile, rising memory prices have made personal computers more expensive, contributing to weaker consumer demand. The company expects the slowdown in the PC market to continue through the first half of 2027.

CEO Lip-Bu Tan acknowledged the challenges during a conference call with analysts, expressing disappointment that Intel could not meet strong customer demand during the quarter. He cited manufacturing supply shortages, an unprecedented memory crunch and the resulting weakness in PC demand as key near-term concerns.

Intel is also preparing to increase its investment in manufacturing. Chief Financial Officer David Zinser said the company had committed approximately $20 billion in capital expenditures for the current year. Spending is expected to rise considerably in 2027 as Intel plans to purchase additional chipmaking equipment to strengthen its production capabilities.

The company’s difficulties were compounded by an explosion at its Fab 28 semiconductor facility in Kiryat Gat, Israel, on October 14. The incident reportedly killed two people and seriously injured another. The factory was shut down for two weeks, disrupting production at a facility primarily used to manufacture data chips with Intel’s 10-nanometer process.

The disruption is expected to reduce revenue by approximately $600 million across the fourth quarter of this year and the first quarter of 2027. Zinser said Intel planned to increase production at the facility by the end of the week.

The setbacks come as Intel attempts to regain its competitive position in the semiconductor industry after losing ground to rivals such as Nvidia. Tan’s turnaround strategy focuses on expanding Intel’s contract manufacturing business, known as its foundry division, and improving its chipmaking technology.

Intel’s recovery will depend partly on its ability to ease manufacturing bottlenecks, meet customer demand and manage rising investment costs. Although third-quarter revenue increased substantially from a year earlier, the company’s latest forecast signals that operational challenges and softer PC demand could remain significant concerns in the months ahead.