JasonDoiy
Fitch Ratings has downgraded Intel’s (NASDAQ:INTC) long-term issuer default rating and senior unsecured ratings to ‘BBB’ from ‘BBB+’ and affirmed its short-term IDR and commercial paper rating at ‘F2’.
The rating outlook is negative and reflects a more challenging demand environment than previously anticipated, which is constraining profitability growth at the Santa Clara, California-based tech giant, the agency said.
“Credit metrics remain 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.”
Intel’s more nuanced foundry strategy, linking future capital spending to committed customer demand, “is a net credit positive,” but it also highlights the elevated execution risks tied to the company’s technology roadmap, Fitch added.
The rating agency also cited growing competition from peers such as Dutch rival NXP Semiconductors (NXPI), Broadcom (AVGO), and Advanced Micro Devices (AMD).
When compared with other ‘BBB’ rated peers — Marvell Technology (MRVL), Microchip Technology (MCHP), and Micron Technology (MU) — Fitch said Intel holds a superior market position; nevertheless, these firms have stronger financial structures and weaker yet more stable market positions.
Fitch also noted that Intel (NASDAQ:INTC) remains weaker than TSMC (TSMC) in both operating and financial profiles, given TSMC’s superior FCF profile and strong credit metrics.
The ratings agency, however, 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.