Shares of Intel (NASDAQ: INTC) were falling today as the struggling chip stock got swept up in a broader sector sell-off after industry bellwether ASML (NASDAQ: ASML) gave a downbeat forecast for 2025.
As of 3:16 p.m. ET, Intel stock was down 3.3% on the news.
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Foundry demand is slowing
ASML is a key company to watch in the semiconductor industry, especially for foundry operators like Intel, as ASML supplies them with top-of-the-line lithography machines to make semiconductors.
This morning, in its third-quarter earnings report, ASML said the expected recovery in demand for its machines is taking longer than expected, citing weakness in logic and memory chips. Intel competes in logic chips but sold its memory business a few years ago.
Intel's foundry operations are surrounded by uncertainty following the company's restructuring announcement in August, which includes laying off at least 15% of its workforce. Intel did score a win last month when it announced a deal to make a custom artificial intelligence (AI) fabric chip for Amazon. However, the ASML news signals that growth in the foundry industry could be more sluggish than investors had hoped. This would likely impact Intel as the company has major ambitions for its new foundry services business.
Elsewhere, the company also announced a partnership with AMD to form an advisory group on the x86 central processing unit (CPU) architecture they share. The move seems designed to push back on Arm Holdings, which dominates smartphone CPU market share due to its power-efficient architecture and has been taking market share from Intel and AMD.
What's next for Intel
Any sector-level or macro headwinds will be especially problematic for Intel as the company is already struggling to turn a profit and is losing billions a quarter in its foundry division. While there is potential for a comeback, Intel can ill afford anything to go wrong at this point, whether that's internally or outside of its control.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Advanced Micro Devices. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
