Intel's credit rating downgraded by Fitch on demand challenges

Fitchdowngrading U.S. chipmakerIntel’screditratingby one notch Monday, according to a note by theratings agency, which assigned a negative outlook toIntel’srating.

FitchdowngradedIntelto BBB from BBB-plus, placing it just two notches shy of junkcreditstatus.

The downgrade followsFitch’s assessment that Santa Clara, California-headquartered Intel faces heightenedchallengesmaintainingdemandfor its products.Fitchcited growing competition from peers such as Dutch rival NXP Semiconductors, Broadcom Incand Advanced Micro Devices.

“Creditmetrics 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 to recover its recentratings,Fitchanalysts wrote on Monday.

Fitchadded that while Intel holds a better market position than other similarly rated peers, its financial structure is relatively weaker and it faces “higher execution risk.”

Intel still enjoys a strong market position in the provision of PCs and traditional enterprise servers,Fitchnoted, while warning the company faces heightened PC competition from Qualcommand AMD.

Intel will need to ramp up its PC shipments while also reducing its balance sheet debt to recover its previouscreditratings,Fitchsaid.

Theratings agency calledIntel’sliquidity 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 billioncreditrevolver. It also had an undrawn $5 billion, 364-day revolver that will come due in January 2026,Fitchsaid.

Fellowratings agency S&P GlobalsimilarlydowngradedIntel’screditratingto BBB from BBB-plus in December, while Moody’sRatingsdowngradedits senior unsecured debt’sratingin August last year.