Intel shares tumble as supply shortages and cash burn weigh

Intel shares plunged 23% in after-hours trading after the chipmaker warned it would burn cash this year and forecast December-quarter revenue below market expectations. Manufacturing bottlenecks are limiting its ability to meet demand for data-center chips, while rising memory prices are pushing up PC costs and weakening demand. Intel warned that PC market softness could persist through the first half of 2027.

A deadly October explosion at Intel’s Kiryat Gat factory in Israel is expected to erase roughly $600 million in revenue over two quarters and reduce supplies of AI server chips to cloud customers. Finance chief David Zinsner said production was expected to ramp up by the end of the week following a two-week shutdown. Intel is still assessing which wafers can be salvaged and whether the disruption could have a longer-lasting impact.

CEO Lip-Bu Tan’s turnaround strategy centers partly on expanding Intel’s contract manufacturing business, but that investment is weighing on cash flow. The company remains on track to spend $20 billion in capital this year, with spending set to rise sharply in 2027. The weak outlook overshadowed third-quarter revenue growth of 21% to $16.51 billion and adjusted earnings that exceeded expectations. Shares of other major chip companies also fell in extended trading.