Investors remain nonplussed by supply problems since guidance remains on track
Intel Corp.’s apology Wednesday to customers about its ongoing supply constraints did not appear to surprise investors, but the news could prove to be an eventual benefit to rival Advanced Micro Devices Inc.
Earlier on Wednesday, the chip giant gave customers an update in a regulatory filing about its current manufacturing challenges.
“I also want to update you on our actions and investments to improve supply-demand balance and support you with performance-leading Intel products,” wrote Michelle Johnston Holthaus, an Intel INTC, +0.55% executive vice president and general manager of sales and marketing. “Despite our best efforts, we have not yet resolved this challenge.”
Investors were not ruffled by the news, since Intel reaffirmed its previous guidance for the fourth quarter, which included a forecast for an added $1.2 billion in revenue for the full year.
“I believe Intel will meet its financial commitments, if for no other reason it won’t need to provide price discounts that aren’t already contractually committed,” said Pat Moorhead, principal analyst at Moor Insights & Strategy, in an email.
It was not clear if Intel is experiencing additional manufacturing issues or if the letter was repeating the ongoing issues CEO Bob Swan had discussed in the company’s earnings conference call last month.
“We’re letting our customers down, and they’re expecting more from us,” Swan said last month in the call. “PC demand has exceeded our expectations and surpassed third-party forecasts. We now think the market is stronger than we forecasted back in Q2, which has made building inventory buffers difficult. We are working hard to regain supply/demand balance, but we expect to continue to be challenged in the fourth quarter.”
While it takes PC makers time to switch their manufacturing to accommodate another brand of microprocessor, it’s feasible that AMD AMD, -3.56% could ultimately benefit from Intel’s supply issues. “This is an opportunity for AMD to gain share, but it will take some time for OEMs [original equipment manufacturers] to switch volumes to AMD,” said Kevin Krewell, principal analyst at Tirias Research. He added, though that it was not clear which Intel products were most effected by the issues.
With AMD’s stock on a tear this month, investors might see Intel’s news as another reason to jump on board.