Those who were looking for the Sapphire Rapids chip to solve Intel’s (NASDAQ:INTC) momentum troubles just had their hopes dashed. Intel’s slumping a bit in Monday afternoon trading as the new chip is hitting a sluggish patch of demand. Worse, it’s not likely to improve any time soon. Word from Ming-Chi Kuo with TF International Securities says that demand is showing up weak at best for the new Sapphire Rapids server chip.
Large-scale shipments were expected to start in the next quarter, but suppliers were told to cut back nearly 50% as demand never reached the levels Intel hoped for. This came as a blow, particularly to those looking for a buying spree from Microsoft (NASDAQ:MSFT), who was expected to buy a good slug of chips, but revised its orders downward between 50% and 70%. Instead, Microsoft is now expected to turn its chip buying to Ampere starting in the first half of 2024. That’s going to lower Microsoft’s interest in x86 chips and hurt Intel further.
That’s bad enough, but that news comes hot on the heels of Intel’s departure from the cryptocurrency mining arena just days ago. It got in on the action late, and now, it’s set to depart altogether by shuttering production on the Blockscale ASIC chip. Between the loss of that business and now the disappointing results of Sapphire Rapids, it’s sending not only Intel lower but also much of the semiconductor industry. Some of the field’s biggest names, like Micron (NASDAQ:MU), Nvidia (NASDAQ:NVDA), and even AMD (NASDAQ:AMD) were down in Monday’s trading.
Wall Street is, in general, skeptical of Intel right now. Analyst consensus calls INTC stock a Hold based on six Buys, five Sells, and 20 Holds. In addition, Intel stock also has a narrow downside risk of 1.31%.
