Intel's stock plunges 10% after the tech giant said production problems will delay its new chips

Intel CEO Bob SwanIntel
  • Intel's shares tanked 10% late Thursday after the chip giant announced that production problems have delayed the rollout of its next generation chips.
  • Intel CEO Bob Swan said the company found "a defect mode" in its manufacturing process which will push back its production schedule.
  • Intel said the problem was related to its 7 nanometer process, referring to the manufacturing technology based on the line-width on chips. Intel historically led the way in producing smaller and less expensive processors, but has struggled with its manufacturing process.
  • Intel posted better-than-expected results for the second quarter, with profits of $5.1 billion on revenues of $19.7 billion.

The spotlight is back on Intel's production headaches.

The semiconductor giant on Thursday posted second-quarter results that beat Wall Street expectations. But Intel's stock plunged 10% in late trades after the company said production problems will delay the rollout of its next generation of chips.

"We have identified a defect mode in our seven nanometre process that resulted in yield degradation," Intel CEO Bob Swan told analysts on the company's earnings call.Advertisement

Intel reported a profit of $5.1 billion, or $1.19 a share, compared with a profit of $4.2 billion, or 92 cents a share, for the year-ago period. Revenue rose 20% to $19.7 billion from the year-ago quarter. Adjusted profit was $1.23 a share. Analysts were expecting a profit of $1.11 a share on revenue of $18.6 billion.

Intel said the problem was related to its 7 nanometer process, referring to the manufacturing technology based on the line-width on chips. Intel historically led the way in producing smaller and less expensive processors, but has struggled with its manufacturing process.

Intel has historically led the way in producing smaller and less expensive processors, guided by Moore's Law, the chip industry trend named after Intel co-founder Gordon Moore, in which the number of transistors that companies are able to put on an integrated circuit has roughly doubled every two years.
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This trend has allowed chip makers to make smaller, more powerful, and less expensive processors, but Intel and competitors like AMD. But Intel has wrestled with problems in transition to a 10 nanometer process , as it also faced stiffer competition from rivals, led by AMD.

"We have also invested in contingency plans to hedge against further schedule uncertainty," Swan also said on the call. Got a tip about Intel or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.Advertisement

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