Intel’s Credit Rating Is Downgraded
U.S. chipmaker Intel (INTC) has had its credit rating downgraded on rising demand concerns.
Fitch Ratings has downgraded Intel’s credit rating by one notch to BBB from BBB-plus, placing it just two notches above “junk” credit status and assigning a negative outlook to the company.
The downgrade comes after Fitch’s assessment that Intel faces growing challenges maintaining demand for its various products.
In particular, Fitch cited growing competition from rivals such as Broadcom (AVGO) and Advanced Micro Devices (AMD) as reasons for its downgrade.
“Credit metrics remain weak and will require both stronger end markets and successful product ramps, along with net debt reduction over the next 12-14 months,” wrote Fitch.
The ratings agency added that Intel’s financial structure is relatively weak and it faces “execution risk.”
Intel’s microchips and processors still enjoy a strong market position related to personal computers (PCs) and enterprise servers.
However, the company has lost ground in many other areas, notably in the red-hot field of artificial intelligence (A.I.) models and applications.
Intel must ramp-up its PC chip shipments and reduce its debt to recover its previous credit rating, said Fitch.
Fellow ratings agency S&P Global (SPGI) downgraded Intel’s credit rating to BBB from BBB-plus last December, while Moody’s (MCO) downgraded the company’s rating in August 2024.
INTC stock is down 4% this year and trading at $19.50 U.S. per share.
