Intel Corporation (NASDAQ:INTC) shares were declining throughout regular trading hours Monday as the company received a downgrade from an analyst over mounting competition.
Northland Capital Markets analyst Gus Richard downgraded the stock in a note to investors from market perform to underperform due to CPU competition from the likes of Advanced Micro Devices, Inc. (NASDAQ:AMD) and other companies developing similar products.
“Intel’s process technology leadership is diminished if not evaporated,” wrote Richard. He added that he expects AMD’s 7-nanometer server CPU and 14-nanometer notebook CPU offer great competition to Intel’s own products.
This prediction is due to the fact that other companies have been more successful at decreasing the size of their chips in terms of nanometers in order to make them cheaper and more powerful. Intel has a 10-nanometer process that is “roughly” equivalent to the 7-nanometer product that competitor Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM), which has AMD as a customer.
Plus, Intel’s 10-nanometer technology has been delayed multiple times, prompting its management to recently say that the product won’t be in production until some time in 2019, which could allow other companies to get ahead of Intel.
“We expect that AMD will sample a 7-nanometer server CPU in 2H:18 and move into production in 2019 likely in lockstep or slightly ahead of Intel,” Richard wrote. “We also expect AMD’s 14nm notebook CPU to ramp in 2H:18, diminishing Intel lead in this category and driving AMD share gains.”
INTC stock fell about 3.4% on Monday following the downgrade.