Intel expects second-quarter revenue to fall below the midpoint of previously issued projections because of a new U.S. ban on chip exports to Huawei Technologies.

Santa Clara

Intel is projected to witness a decline in its second-quarter revenue, falling short of its previously forecasted range due to the implications of a new U.S. ban on chip exports to Huawei Technologies. The U.S. government's ban, specifically targeting certain chip sales to Huawei as part of an ongoing investigation, has prompted Intel to adjust its revenue expectations to the lower end of its projection.

Intel's initial guidance had estimated revenues between $12.5 billion and $13.5 billion for the quarter. However, the chipmaker has now signaled that figures are more likely to touch the lower boundary of this range. This adjustment marks the second downward revision by the company in a short span, following a similar update weeks prior where both earnings and revenue forecasts were trimmed. At that time, Intel's reported revenue of $13 billion fell approximately 5% short of analyst expectations.

Despite the consecutive downward revisions, investor response appears measured, with Intel's stock price experiencing a modest decline of 2.2%. The limited impact on stock price could be in part due to the relatively marginal revenue Intel derives from Huawei, which constitutes roughly 0.13% of its total revenue. Nonetheless, the broader implications of the export ban and the potential ripple effects remain a point of concern for the company.

Intel's financial performance has been under scrutiny, with the stock down 39% in the current year, following a 49% decrease in 2022. CEO Pat Gelsinger faces significant challenges ahead as he spearheads efforts to navigate the company through its current difficulties and towards a more promising future.



Intel sees revenue falling amid Huawei ban

We've talked about Intel delivering a mediocre guidance. The chipmaker warns that the second quarter revenue will be hit by the news that the US ban on chip exports to Huawei. Abigail Doolittle is with me. It's a double blow, really, for Intel, isn't it, in a number of weeks? It is. This is interesting. To my memory, it's pretty rare for a big company like this to guide down twice in just a couple of weeks. But a few weeks ago, when they reported, they did exactly that for both earnings and revenue. Revenue of $13 billion was about 5% light of what The Street was looking at. And so now, as you mentioned, the range, $12.5 billion to $13.5 billion, they're saying that they're going to be in the low end of that. So it really is a double guide down in some ways. Investors seem to be taking it somewhat in stride, though. The stock down just 2.2%. If they had given a really bad guidance all in one earlier, it could have been a much bigger blow at that time. But the cause, perhaps they have a good excuse, a good reason for this. And of course, that is the US government basically banning Intel and Qualcomm from selling some of its chips to Huawei as they investigate a particular, I think it's the 7-nano chip, in one of their phones. The interesting thing about it, though, is they use the SPLC function in the Bloomberg terminal. And just 0.13% of Intel's revenue is from Huawei. So it's still hard to know how much this is of an impact on their actual revenue. It will be of that amount. Maybe they see ripple effects. The stock on the year right now down 39%. And that's not even the worst year in a long time. In 2022, it fell 49%. So Pat Gelsinger really has a lot ahead in terms of manufacturing the turnaround he's been talking about.

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