- Intel’s credit rating has been downgraded from “BBB+” to “BBB” by S&P Global due to concerns over its recovery pace and management uncertainty.
- This follows the unexpected retirement of former CEO Pat Gelsinger and Intel’s recent removal from the Dow Jones Industrial Average.
What happened: Intel faces credit rating challenges
Intel is facing increasing challenges as S&P Global downgraded its credit rating from “BBB+” to “BBB.” This decision, announced on Tuesday, stems from concerns over the chipmaker’s slow recovery and management uncertainty, particularly following the abrupt retirement of former CEO Pat Gelsinger. His departure has left Intel without a clear succession plan, which has raised doubts about its future direction. Despite assurances from interim co-CEO David Zinsner regarding the continuity of business strategies, S&P Global expressed concerns about potential changes under new leadership. Additionally, the downgrade comes on the heels of Intel’s removal from the Dow Jones Industrial Average. The company’s revenue projections for 2024 failed to meet expectations, and S&P has also raised alarms about Intel’s ability to execute its foundry strategy amidst increasing outsourcing of its products.
Also read: Intel names chip industry veterans to board amid CEO search
Also read: Intel CEO Pat Gelsinger announces retirement
Why this is important
Intel’s downgrade is significant, highlighting deeper issues within a major player in the semiconductor industry. This situation not only impacts investor confidence but also has broader implications for the tech sector, particularly as the demand for advanced chips rises. With the complexities of chip manufacturing escalating, Intel’s reliance on outsourcing, especially to TSMC for its latest processors, raises questions about its competitive position. The cancellation of its 20A process node in favour of the 18A node further illustrates the hurdles Intel must overcome to maintain its technological edge.
The semiconductor industry is currently experiencing intense competition, particularly from companies like AMD and NVIDIA, which are making significant strides in both consumer and enterprise markets. As Intel navigates these challenges, its upcoming product launches, such as the Clearwater Forest and Panther Lake chips, are crucial for restoring profitability and attracting external foundry clients. S&P Global’s cautious optimism for Intel’s fortunes in 2025 hinges on the anticipated demand for AI PCs and the end of support for Windows 10, which could drive revenues in its client computing group. However, the risk of further downgrades looms if Intel fails to reclaim its share in the x86 market or capitalise on its AI hardware advancements. The outcome of these developments will significantly influence not only Intel’s future but the overall landscape of the semiconductor market.
