By Matt Tracy
Aug 4 (Reuters) - Fitch downgrading U.S. chipmaker
Intel's (INTC) credit rating by one notch on Monday, according to a
note by the ratings agency, which assigned a negative outlook to
Intel's (INTC) rating.
Fitch downgraded Intel (INTC) to BBB from BBB-plus, placing
it just two notches shy of junk credit status.
The downgrade follows Fitch's assessment that Santa Clara,
California-headquartered Intel (INTC) faces heightened challenges
maintaining demand for its products. Fitch cited growing
competition from peers such as Dutch rival NXP Semiconductors (NXPI)
, Broadcom Inc (AVGO) 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 (INTC) to recover its
recent ratings, Fitch analysts wrote on Monday.
Fitch added that while Intel (INTC) holds a better market position
than other similarly rated peers, its financial structure is
relatively weaker and it faces "higher execution risk."
Intel (INTC) 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 (QCOM) and AMD.
Intel (INTC) will need to ramp up its PC shipments while also
reducing its balance sheet debt to recover its previous credit
ratings, Fitch said.
The ratings agency called Intel's (INTC) 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 (INTC) credit rating to BBB from BBB-plus in December, while
Moody's Ratings downgraded its senior unsecured debt's rating in
August last year.
(Reporting by Matt Tracy; Editing by Leslie Adler)
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