Intel downgraded to just above junk status with negative outlook
Fitch cites increasing risk, rising competition, and weak financial metrics.
Fitch Ratings downgraded U.S. chipmaker Intel by one notch on Monday, assigning a negative outlook to the company’s credit rating. Intel’s long-term issuer default rating was lowered from BBB+ to BBB, placing it just two steps above non-investment grade (junk) status.
The downgrade reflects Fitch’s assessment that Intel is facing mounting challenges in maintaining demand for its products, particularly amid intensifying competition from rivals including NXP Semiconductors, Broadcom, and Advanced Micro Devices (AMD).
"Credit metrics remain weak and will require both stronger end markets and successful product ramps, along with net debt reduction over the next 12-14 months" for Intel to recover its recent ratings, Fitch analysts wrote on Monday.
Fitch added that while Intel holds a better market position than other similarly rated peers, its financial structure is relatively weaker and it faces "higher execution risk."
Intel still enjoys a strong market position in the provision of PCs and traditional enterprise servers, Fitch noted, while warning the company faces heightened PC competition from Qualcomm and AMD.
The ratings agency called Intel's liquidity profile "solid," which as of June 28 consisted of a $21.2 billion mix of cash, cash equivalents and short-term investments, as well as an untapped $7 billion credit revolver. It also had an undrawn $5 billion, 364-day revolver that will come due in January 2026, Fitch said.
Fellow ratings agency S&P Global similarly downgraded Intel's credit rating to BBB from BBB-plus in December, while Moody's Ratings downgraded its senior unsecured debt's rating in August last year.
