Intel Corp's INTC product misstep woes are likely to return to haunt the company, casting more clouds over its turnaround efforts.
What Happened: The highly-anticipated Intel server chips, codenamed "Sapphire Rapids," may not ship until the second quarter of 2023, as opposed to a consensus expectation for a launch in the second half of 2022, noted tech analyst Ming-Chi Kuo said on Thursday.
Premised on a second-half launch, Morgan Stanley analyst Joseph Moore said in a December 2021 note that he expects the chip to help Intel narrow its server market share gap with rival Advanced Micro Devices, Inc.'s AMD Milan server processor.
To make matters worse, AMD is expected to begin shipping its Genoa server chip, based on the next-gen, 5-nm processor node technology, in late 2022.
What The Delay Means: Kuo sees the delay as unfavorable for Intel and its server supply chain.
Given the "Sapphire Rapids" server chips have the potential of markedly increasing the average selling prices of components, the delay will prove detrimental to the business momentum of Intel's server supply chain and the chipmaker, the analyst said.
Kuo also expressed doubts regarding demand when "Sapphire Rapids" finally begins to ship, especially amid the recession, as it has been delayed several times.
This suggests Intel's execution still has a lot of room for improvement, he added. Kuo said he is cautious about Intel's commitment to future shipment plans for new chips based on a more advanced mode.
Price Action: Intel closed Friday's session down 3.39% at $37.34, according to Benzinga Pro data.
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