Intel Shares Slide Amid Supply Shortages and AI Chip Demand Surge

Intel Shares Slide Amid Supply Shortages and AI Chip Demand Surge

Shares of Intel Corporation tumbled sharply in Frankfurt after the company announced first-quarter forecasts below market expectations, wiping out billions in market capitalization. Investors reacted to the disappointing guidance as Intel struggles to meet the booming demand for data center chips driven by artificial intelligence applications.

After years of lagging behind competitors like Nvidia in the AI sector, Intel is now experiencing increased demand for its traditional server processors. These chips are critical for powering data centers alongside advanced graphics processors. However, supply chain constraints have prevented the company from fully capitalizing on this surge.

Intel’s factories are currently operating at full capacity, yet the company expects production constraints to ease in the second quarter. Analysts from Jefferies and other brokerages predict that supply shortages will bottom out by March, giving Intel a window to catch up with demand.

The semiconductor giant faces stiff competition from rivals such as AMD and TSMC, which have quickly captured market share in emerging AI and high-performance computing markets. Intel’s challenge lies in expanding its manufacturing footprint and upgrading to advanced chip types while maintaining quality and efficiency.

Additionally, the global memory shortage is affecting Intel’s largest segment — personal computers. Price increases in memory components could dampen consumer demand, even as Intel launches its new "Panther Lake" PC chips aimed at regaining lost market share.

CEO Lip-Bu Tan has focused on cost-cutting measures and reducing expansive contract manufacturing ambitions. Investor confidence now hinges not only on Intel meeting short-term production targets but also on demonstrating a credible long-term strategy that addresses supply chain bottlenecks, competition, and technological advancement.