Intel turmoil prompts S&P Global to downgrade chipmaker's credit rating
Intel’s troubles continue to compound after S&P Global on Tuesday downgraded its credit rating, citing concerns about the chipmaker’s pace of recovery and management uncertainty.
Intel’s credit rating has dropped from “BBB+” to “BBB” after 2024 revenues and outlook failed to meet S&P’s expectations.
The decision comes just over a month after Intel was delisted from the Dow Jones Industrial Average and a little over a week after former Intel CEO Pat Gelsinger abruptly “retired,” leaving the x86 giant without a succession plan or a clear strategy going forward.
Gelsinger’s departure appears to have contributed to S&P Global’s decision, despite assurances by interim co-CEO and CFO David Zinsner last week that the chipmaker’s strategy remained intact.
“Mr. Gelsinger’s leadership was critical to the company’s integrated manufacturing strategy,” S&P Global said in a statement. “Despite the company’s assurances that business strategy will remain largely unchanged, we still assume some level of change under the new CEO, which could add to uncertainty of the timing of the business turnaround.”
S&P Global also voiced concerns regarding Intel’s ability to execute its foundry strategy. It argues that the chipmaker’s success will be “determined by foundry’s ability to manufacture its most advanced chips in-house and attract external clients for high-volume production.”
Over the past year, we’ve seen Intel outsource a growing number of products, including its latest generation desktop and mobile processors codenamed Arrow Lake and Lunar Lake, to TSMC. That decision was followed by the cancellation of Intel’s 20A process node in order to prioritize 18A.
However, going into 2025, the first products built on Intel’s 18A process tech are slated to hit the market with a many-cored chip called Clearwater Forest in the datacenter and Panther Lake for client.
“We believe successful execution of this plan is paramount to Intel improving profitability, reducing financial pressure, and helping attract external foundry customers,” S&P Global wrote.
Looking ahead to 2025, S&P Global remains cautiously optimistic about Intel’s fortunes, particularly for its client computing group where the end of support for Windows 10 and the growing demand for AI PCs are expected to drive up revenues.
Similarly, S&P Global also anticipates modest growth for Intel’s datacenter business, which has struggled in recent quarters as more enterprises look to refresh non-AI server equipment and the chipmaker’s AI hardware gains traction.
Having said that, S&P Global doesn’t rule out the possibility of another downgrade to Intel’s credit rating, noting that if the x86 CPU market weakens, the chipmaker continues to underperform, or its ratings-adjusted leverage stays above 2.5x.
Likewise, the S&P Global notes an upgrade would be in order if Intel can claw back x86 share, capitalize on its AI hardware, or start signing large foundry customers.
Intel declined The Register’s request for comment. ®
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”