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Investing.com-- Fitch downgraded chipmaker Intel Corporation’s (NASDAQ:INTC) credit rating by one stage on Monday, the ratings agency said in a note, as it maintained a Negative outlook on the firm.
Fitch downgraded Intel to BBB from BBB+, and said its Rating Outlook was Negative. The new rating is just two levels above junk status.
The ratings agency cited a “more challenging demand environment than previously anticipated,” which in turn was hurting profitability.
Fitch said Intel’s credit metrics were weak and “will require both stronger end markets and successful product ramps, along with net debt reduction over the next 12-24 months, to return EBITDA leverage to levels consistent with the ratings.”
Fitch also noted that while Intel’s plans for its foundry strategy were net credit positive, they were subject to high execution risks.
Still, the ratings agency noted that Intel’s liquidity position was “solid,” and that its cost cutting measures stood to greatly increase profitability. Intel’s asset sales were also supporting liquidity.
But the chipmaker, which has largely lagged rivals such as Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and TSMC (NYSE:TSM) in capitalizing on the artificial intelligence boom, still has an unclear AI strategy, Fitch said.
Fitch said its negative outlook on Intel also stems from the company’s rivals having stronger financial structures and weaker but more stable market positions.
S&P Global had similarly cut Intel’s credit rating to BBB from BB+ in December 2024, while Moody’s downgraded Intel in August.