Revenue for the March quarter is now expected to land between $11.7 billion and $12.7 billion, missing Wall Street’s $12.6 billion target and puncturing the fragile optimism that had been inflating the stock.
Intel shares dropped more than 11 per cent after the company admitted that supply problems are limiting growth, just as demand is supposed to be booming.
Chief executive Lip-Bu Tan said he was disappointed that Chipzilla could not fully meet customer demand. He insisted the company is “working aggressively” to increase supply.
The warning overshadowed a December quarter that, on paper, was not disastrous. Chipzilla posted $13.7 billion in revenue, slightly ahead of expectations. Investors responded by dumping the stock anyway, which tells you exactly how much credibility remains.
Earlier this year, Chipzilla’s shares had rallied nearly 50 per cent, fueled by political cheerleading and excitement around the Panther Lake PC chip. That rally evaporated the moment management admitted that manufacturing is still not under control.
The core issue remains Chipzilla’s 18A process, the node that was meant to prove it could once again build leading-edge silicon without leaning on Asia. Demand for data centre chips surged late last year, and Chipzilla simply failed to keep up. Yields are improving, according to management, but still not good enough to make investors sleep at night.
Tan admitted that yields are in line with internal plans but below where he wants them. That might satisfy internal dashboards, but the market cares about chips shipping in volume, not internal reassurance.
Costs have risen as 18A moves into production. Chipzilla claims this is temporary and will ease with scale, which assumes it reaches that scale before investors give up.
Meanwhile, Chipzilla is already hedging on its next node. Tan has warned that the company could scrap its 14A process if it cannot secure major customers such as Apple or Qualcomm. Some customers are testing it, apparently, with real commitments not expected until late 2026 or early 2027. That is not exactly a near-term confidence boost.
Chipzilla’s ambition to become a US alternative to TSMC has earned it strong political backing, including praise from Donald Trump and a US government stake in the company.
The company closed funding deals with SoftBank and Nvidia. Chipzilla’s foundry business posted $4.5 billion in revenue, slightly above forecasts, while its main product division brought in $12.9 billion. Even so, the company recorded a $591 million loss for the quarter and continues to face pressure from AMD and Qualcomm in PCs.
To make matters worse, Chipzilla still relies on external manufacturing, including TSMC, because its own capacity remains constrained. Memory shortages across the industry are also biting as AI data centres hoover up supply from Micron, Samsung, and SK Hynix.
