Tesla, Intel, and TSMC Shares Slide in Premarket

Tesla Inc. (NASDAQ: TSLA) and Intel Corporation (NASDAQ: INTC) experienced significant stock price declines in premarket trading on Monday, April 3, 2024. Tesla’s shares fell 1.86% to $163.53, extending the previous day’s 4.90% drop, while Intel’s stock plummeted 5.69% to $41.44 following a 1.30% decrease in the previous session.

Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) also saw a 1.58% dip in premarket trading to $138.00, adding to the 0.90% loss from the previous close.

Intel Fumbles on Foundry Loss, TSMC Operations Affected by Taiwan Earthquake

The sharp decline in Intel’s stock price comes from the company’s disclosure of a $7 billion operating loss for its foundry business in 2023, a significant increase from the $5.2 billion loss reported the year before.

The manufacturing unit’s revenue also fell by 31% to $18.9 billion in 2023, compared to $27.49 billion in the previous year. CEO Pat Gelsinger indicated that 2024 would mark the peak of operating losses, with expectations to break even by 2027.

Intel acknowledged missteps, including delaying the use of extreme ultraviolet (EUV) machines, which are more cost-effective for chip production. The company plans to invest $100 billion in building or expanding chip factories in four U.S. states to catch up with rivals like TSMC and Samsung Electronics.

Meanwhile, TSMC and other Taiwanese semiconductor manufacturers faced uncertainty following a magnitude 7.4 earthquake that struck Taiwan on April 3, 2024.

The earthquake, the largest in Taiwan in a quarter-century, forced TSMC and UMC to evacuate parts of their factories, raising concerns about potential disruptions in chip production. Taiwan produces 80-90% of the world’s silicon chips, which power smartphones and AI computers, and the earthquake’s impact could lead to chip supply disruptions and likely price increases for electronic devices in the coming months.

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Tesla Continues to Slide After Weak Q1 Deliveries

Tesla, the leading electric vehicle manufacturer, experienced an 8.5% drop in quarterly deliveries, the first decline in nearly four years. The company delivered 386,810 vehicles, missing Wall Street estimates and causing its shares to fall 5.2%, erasing about $30 billion in market value.

Tesla cited preparations for increased Model 3 production and shutdowns at its Berlin plant due to external factors for the drop in volumes. The company faces challenges such as aging models, high-interest rates, and stiff competition from cheaper models in China, with local manufacturers like BYD and Xiaomi gaining ground. BYD even overtook Tesla as the world’s largest EV maker in the previous quarter.

Despite the quarterly performance, Tesla is focusing on producing its next-generation electric vehicle, with a warning of “notably lower” sales growth for the year. The company’s CEO, Elon Musk, has been vocal about the need for cost-cutting measures and has hinted at the possibility of price reductions to stimulate demand.

Do you think Intel will be able to fix its foundry missteps? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.