Intel on course for worst day ever, triggers global chip rout

By Anhata Rooprai

Oct 30 (Reuters) - Intel ‌tumbled 29% on ​Friday and ​was on track for its sharpest one-day decline, deepening a broader retreat in technology stocks as investors grew increasingly wary of weakening PC demand and ‌the vast spending required to build out AI infrastructure.

The steep fall put the ⁠US chipmaker on track to shed more than $137 billion in market value, underscoring the challenges facing CEO Lip-Bu ‌Tan's turnaround as a prolonged ‌PC slump offsets heavy investments in AI and manufacturing expansion.

Semiconductor stocks, including Advanced Micro Devices, Arm Holdings, Qualcomm, Nvidia, Broadcom and Micron, fell between 2% and 10%.

"The market is ​in a sell first, ask questions later mood right now, and Intel's warning has given investors an easy excuse to take some money off the table across chip stocks," ⁠said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

The selloff spread to server makers, reflecting investor caution toward companies tied to ​the semiconductor and AI infrastructure supply chain.

Shares of server makers Dell Technologies, Hewlett Packard Enterprise and Super Micro Computer fell between 6% and 10%.

The ​STOXX Europe 600 Technology Index fell 2%, with ‌sector heavyweight ASML shedding 4.6%. US-listed shares of TSMC, the world's largest contract chipmaker, fell 3.3%.

Intel forecast fourth-quarter revenue of $15 billion to $16 billion, below ⁠analysts' average estimate of $17.07 billion, according to data compiled by LSEG.

Finance chief David Zinsner also said Intel does not expect positive cash flow this year.

MEMORY CRUNCH BITES

Higher memory prices, driven by suppliers shifting capacity ⁠toward AI-focused high-bandwidth memory chips, are raising PC costs and weighing on already weak consumer demand.

PC chips ​accounted for roughly half of Intel's third-quarter revenue, and the company expects sales from the segment to decline more than 20% sequentially this quarter after a 5% drop in the September period.

"It will be important ‌to see if Intel can expand the highly profitable Xeon product supply to help offset this developing weakness in PC," said Brian Mulberry, ‌chief market strategist at Zacks Investment Management.

"Bottom line, weaker sales volumes, higher manufacturing costs, and an ⁠out-of-cycle product mix is a recipe ‌for the stock to decline ​over the near term as future earnings are under a lot of pressure."

(Reporting by Anhata Rooprai in Bengaluru, additional reporting by Sudeshna Ghoshal; Editing by ‌Shinjini Ganguli)

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