Intel shares plunged as much as 23 per cent in after-hours trading on 29 October after a deadly factory explosion, and weakening PC demand wrecked its financial forecasts.
According to Barron’s, the chipmaker revealed that an explosion at its Kiryat Gat factory in Israel would cost about $600 million in lost revenue over two quarters. The accident killed two workers and seriously injured another, forcing the plant to suspend production for approximately two weeks.
Chipzilla expects to lose about $300 million in revenue in the fourth quarter, with a similar impact expected in the first quarter of 2027. The disruption has reduced supplies of Xeon server processors just as demand from cloud computing customers is accelerating.
Intel finance chief David Zinsner said the company was examining silicon wafers caught up in the shutdown to determine which could still be processed and sold. Production was expected to resume by the end of October, although the extent of the damage to unfinished chips remained uncertain.
The explosion compounded an already miserable outlook for Intel’s traditional PC processor business. Rising DRAM and storage prices have raised computer manufacturing costs, discouraging purchases and undermining processor demand. Zinsner warned that the PC slowdown would continue through at least the first half of 2027.
Intel forecast fourth-quarter revenue of $15 billion to $16 billion, well below analysts’ expectations of about $17 billion. Adjusted earnings are expected to reach just 25 cents per share, compared with market forecasts exceeding 40 cents.
The warning overshadowed respectable third-quarter results. Revenue increased 21 per cent to $16.51 billion, while adjusted earnings reached 52 cents per share, comfortably beating expectations. However, revenue from Intel’s PC-focused client computing business fell 5 per cent to $8.1 billion, underscoring continued weakness in its largest traditional market.
Better news came from data centres, where revenue from server processors and AI-related products rose 78 per cent to about $7.3 billion. Intel has benefited from growing demand for conventional CPUs needed to operate cloud infrastructure and coordinate increasingly complex AI workloads, although manufacturing constraints have prevented it from fully exploiting the opportunity.
Intel’s foundry operation recorded 58 per cent revenue growth to about $6.7 billion, but the business remained deeply unprofitable, reporting an operating loss of $1.9 billion. The company continues to invest heavily in advanced manufacturing technologies as it tries to challenge Taiwan’s TSMC for external chipmaking customers.
The financial pressure is unlikely to disappear quickly. Intel increased its planned 2026 capital expenditure from $18 billion to $20 billion and expects spending to rise significantly in 2027. The company raised $23 billion through a share offering in August, but its expensive manufacturing expansion continues to consume cash as the recovery remains uncertain.
Intel chief executive Lip-Bu Tan acknowledged the supply problems during the earnings call, saying, “I’m disappointed that we were not able to meet strong customer demand in this quarter.” Despite the setbacks, Tan maintained that demand for Intel processors remained strong over the longer term, particularly in the expanding server market.
Investors were considerably less enthusiastic. Intel shares had gained nearly 150 per cent during 2026 before the latest warning, leaving the company vulnerable to a sharp correction. The sell-off spread across the semiconductor industry, dragging down Nvidia, AMD, Broadcom, Micron, Qualcomm and Arm as investors reassessed an industry struggling with soaring component costs, supply shortages and expensive manufacturing commitments.
