Intel, Nvidia Stocks Slide Amidst Chip Turmoil
Intel stock price plummets most in 50 years after it announces job cuts, as Nvidia declines on report of AI antitrust probe
Intel experienced its biggest stock price drop in half a century on Friday after it said it would cut its workforce by 15 percent and suspend its dividend, measures that exposed the scale of the challenge it faces in recovering ground against rivals.
The company’s close at 26 percent lower was behind only a 31 percent drop in July 1974, three years after Intel’s IPO.
The decline removed about $35bn from Intel’s market value.
Intel’s market capitalisation fell below $100 billion (£78bn) while the drop pulled down other semiconductor stocks.
Chip turmoil
Taiwan Semiconductor Manufacturing Co (TSMC) closed 4.6 percent lower in Taiwan while Samsung closed 4 percent lower.
TSMC is the biggest chip manufacturer and dominates contract chip production, a market Intel is trying to break into, while Samsung is the biggest maker of memory chips.
The South Korean company is also the second-biggest company overall in the chip market, followed by Intel.
Shares in chip companies ARM, Micron Technology and GlobalFoundries also fell.
Stock in Nvidia declined more than 2 percent following a report that the company is being investigated by the US Department of Justice on antitrust grounds.
The Justice Department has contacted Nvidia competitors including AMD and AI chip start-ups to gather information about complaints that Nvidia is abusing its dominance of the AI chip market, The Information reported.
Nvidia probe
Investigators are looking at whether Nvidia pressured cloud providers to buy multiple products and whether it charges customers more for networking gear if they want to buy AI chips from competitors such as AMD or Intel, the report said.
“We compete based on decades of investment and innovation, scrupulously adhering to all laws,” Nvidia said.
As Intel published its second-quarter financial results late on Thursday, Intel chief executive Pat Gelsinger said in a memo to Intel’s workforce that the company was taking “significant actions to reduce our costs”.
Intel plans to deliver $10bn in cost savings in 2025 through measures that include reducing its headcount by roughly 15,000 roles, or 15 percent, Gelsinger said.
He added that the majority of the actions would be completed by the end of 2024.
Intel laid off roughly 5 percent of its workforce in 2023, on top of a previous round of job cuts in October 2022.
“This is an incredibly hard day for Intel as we are making some of the most consequential changes in our company’s history,” Gelsinger told staff.
