Intel's worst month on record

Intel's stock fell twenty nine percent on Friday, its worst day since the nineteen seventies, capping a forty five percent plunge in October, according to FactSet.

Revenue miss triggers the collapse

Intel said revenue this quarter will be between one billion and two billion dollars shy of analyst estimates as the PC market suffers from soaring costs for memory and other components.

PC market still half of revenue

Intel counts on its PC segment for roughly half of its revenue, and consumers are increasingly choosing not to upgrade their computers.

Server market offers hope

CEO Lip-Bu Tan said he sees the global market for server processors increasing as much as five times over the next five years to about two hundred billion dollars.

Data center growth masks problems

Intel's data center business recorded seventy eight percent growth in the third quarter from a year earlier to seven point three billion dollars, but the company cannot make enough chips to fill demand.

Foundry strategy abandoned

Intel is shifting some Oregon factory capacity away from making advanced eighteen A chips to make more older Intel three chips for its data center products, undermining its foundry ambitions.

Customers lose confidence

Harvard Business School professor David Yoffie said prospective foundry customers are concerned Intel doesn't have excess capacity beyond its own demand, making it not a credible supplier.

“They're concerned that if Intel doesn't actually have excess capacity beyond its own demand, that they're just not a very credible supplier.”

Competitor concerns block customers

Chipmakers like Broadcom and Qualcomm may hesitate to manufacture at Intel because it competes with them on the product side, creating a fundamental conflict of interest.

Spin-off proposed as solution

David Yoffie said the right solution is for Intel to spin off the foundry business, calling it not only the best solution but maybe the only solution to attract customers.

“The right solution is for Intel to spin off the foundry business. Not only the best solution, but maybe the only solution.”

U.S. needs Intel to succeed

Yoffie said the United States needs Intel to succeed because TSMC can only create maybe twenty to twenty five percent of their global capacity in the United States.

“Ultimately, TSMC can only create maybe 20-25% of their global capacity in the United States and that will still take several years.”