Intel’s shares fall after weak Q2 outlook

Intel’s shares fell 5.82% to US$20.24 in premarket trading after it announced a weaker-than-expected revenue and profit forecast for Q2.

The company projected revenue between US$11.2 billion and US$12.4 billion for the June 2025 quarter, lower than analysts’ average estimate of $12.82 billion.

The company cited US-China trade tensions and shifts in global semiconductor policies as reasons for the shortfall in projections.

Intel faces challenges in the AI sector and is dealing with the impact of trade restrictions, particularly with China, which has imposed high tariffs on US chips.

Though Intel’s stock has risen 7.2% this year, brokerages have lowered their price targets due to the company’s recent results and high price-to-earnings ratio compared to competitors.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Trade war redefines the global semiconductor landscape

Intel’s situation reflects a fundamental shift from free trade to industrial policy in the chip industry, a change affecting all major players.

China’s recent move to exempt certain US semiconductors from tariffs, reducing duties from 125% to zero for multiple chip classifications, shows how the trade dynamics are evolving despite continued tensions 1.

The US-China chip rivalry has deep strategic implications, with both nations engaged in a complex struggle for technological supremacy while remaining interdependent through global supply chains 2.

This technology rivalry has been described as a “chip war,” where US export controls on advanced semiconductor technology have prompted China to accelerate investments in domestic chip production to reduce foreign dependence 2.

Intel’s warning about being “squeezed from both sides” highlights how geopolitical tensions directly impact business fundamentals through disrupted supply chains, restricted markets, and pricing pressures.

2️⃣ Intel’s multi-year decline contrasts with AI-driven industry growth

Intel’s current challenges represent a continuation of a longer decline, with its stock having dropped 69% over the past five years, illustrating persistent difficulties in adapting to market shifts 3.

While Intel struggles with falling revenue—down to $53.1 billion in fiscal 2024 from $54.2 billion in 2023—the broader semiconductor sector is projected to grow rapidly, reaching $981 billion by 2029, primarily driven by AI advancements 4.