Intel expects the October explosion at its Kiryat Gat, Israel, factory to reduce revenue by about $600 million across its fourth quarter and the following quarter, based on estimates from the company’s chief financial officer, David Zinsner.
Reuters reported that Zinsner said the disruption would cut fourth-quarter revenue by roughly $300 million and have a similar impact in the first quarter. He also said the incident reduced fourth-quarter gross margin by about 200 basis points.
The factory was shut for about two weeks, Reuters reported. Intel was still assessing which wafers could be salvaged for use or sale, and planned to begin ramping production back up by the end of the week. Zinsner said the financial impact could extend further depending on the assessment.
Explosion adds to weak quarterly outlook
The estimated factory impact comes as Intel forecasts fourth-quarter revenue of $15 billion to $16 billion, below the $17.07 billion average analyst estimate cited by Reuters. The company forecast adjusted earnings of 25 cents per share, compared with estimates of 43 cents.
Intel also warned that weakness in the PC market could continue through at least the first half of next year. The company reported third-quarter revenue of $16.51 billion, broadly in line with analyst estimates, and adjusted earnings of 52 cents per share, above estimates, Reuters reported.
The roughly $600 million figure is an estimate of lost revenue over two quarters, not a confirmed final accounting of damage. Intel’s review of affected wafers was ongoing, and the eventual impact could change.
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