Dow-ward spiral: Intel share price drop could see it delisted from blue-chip index

50% dive in market cap during 2024 forcing CEO Pat Gelsinger to revisit strategy

Intel could lose a longstanding seat on the Dow Jones Industrial Average due to the slump in its share price, adding to the chipmaker's existing troubles.

The Santa Clara-based biz was one of the first tech companies to join the blue-chip stock market index in 1999, but financial analysts expect the megacorp may be removed from the Dow, according to Reuters, after a more than 50 percent plunge in its stock price since the start of the year.

Being delisted from the Dow Jones would be another blow to Intel's reputation following technical issues with the Raptor Lake processors, plus confirmation it was suspending its quarterly dividend to investors and laying off more than 16,000 staff, as outlined during its most recent earnings announcement.

We asked Intel to comment.

Last week, Intel chief Pat Gelsinger acknowledged the problems his once seemingly unstoppable behemoth is facing in its restructuring efforts, but insisted he was focused on the steps needed to get back to the top of its game.

Reports indicate that he and Intel's directors are working with investment bankers to try to identify a route out of the company's financial woes, including actions as drastic as a spin-off of its foundry business or putting on hold some of its plans to build new semiconductor fabrication plants.

Updates since last week suggest the options that Gelsinger will present to Intel's board later this month may include selling off at least a stake in its business units, such as the Altera programmable logic (FPGA) division it acquired for $16.7 billion in 2015 and spun off last year.

Some industry observers think this could be a viable move for Intel, with Taiwanese publication TechNews suggesting that longstanding rival AMD may even be a potential buyer as the company seeks to expand its own FPGA product portfolio.

Other expert opinions have include asking the US government to stump up more CHIPS Act cash for the ailing Silicon Valley giant, and ensuring Intel's foundry business gets as many defense-related silicon manufacturing contracts as possible.

Revenue at Intel's foundry biz declined in 2023, leading to a $7 billion operating loss, so the manufacturing side clearly needs support while Gelsinger tries to reshape it into a contract chipmaking concern akin to TSMC.

Other more left-field suggestions include selling off the CPU business and focusing on the foundry side, but as MarketWatch points out, Intel's product teams are essentially the only customer for Intel Foundry Services currently, and the manufacturing arm is not capable of standing on its own given the current level of losses.

It seems Gelsinger's turnaround plans for the chip giant may prove to have been poorly timed, and while they make sense, Intel needs enough revenue to invest in order to make it a success. Otherwise Chipzilla might well end up as Chipzooky. ®