Hannah Grace Tech 10.22.2021 04:Oct AM EDT

Intel Stocks Falling! Here's How Massive Chip Shortage Caused Huge Problems for Tech Giant

Intel Stocks Falling! Here's How Massive Chip Shortage Caused Massive Problems for Tech Giant — Intel has been greatly affected by the worldwide chip shortage, which made Intel stocks fall about nine percent. Aside from the tech sector, other industries have also been negatively hit by the issue. Photo : Justin Sullivan/Getty Images

Intel has been greatly affected by the worldwide chip shortage, which made Intel stocks fall about nine percent. Aside from the tech sector, other industries have also been negatively hit by the issue.

Intel Massive Chip Shortage

According to PC World, Intel said that their customers were not able sell as many laptops as they hoped due to the reported chip shortage. The tech giant did announce that its 2021 third-quarter earnings saw both revenue and profits rising as compared to the last year's report, but there's a catch.

Despite the reported increase, Intel's Client Computing Group (CCG) revenue declined by two percent to $9.7 billion from a year earlier. For background information, CCG has the most important figures since it reports sales of processors and chipsets for laptop and desktop computers.

"The CCG was down due to lower notebook volumes due to industry-wide component shortages, and on lower adjacent revenue, partially offset by higher average selling prices (ASPs) and strength in desktop," Intel stated.

In 2020 and 2021, the chip shortage affected both the automotive and processor industry, per PC World.

On the other hand, BBC previously reported that Intel's chief executive Pat Gelsinger had foreseen the chip shortage. Gelsinger added that the predicted chip shortage would last up to two years before the supplies return to normal state

Intel Stocks Drop to Nine Percent

According to Market Watch, Intel stocks fell in the extended session on Thursday. The shares dropped about nine percent in the extended session after gaining more than one percent in the regular session.

Because of the dropped shares, analysts have questioned Intel executives about the declining gross margin, in which the company promised to bring back the growth in a few years. Unfortunately, Intel Executives are just defending their forecast rather than answering the questions, per Market Watch.

For a definition of gross margin, Investopedia stated that it is a net sales less the cost of goods sold--which means it is the amount of money a company retains after removing the direct costs combined with the production of the goods it sells as well as the services it provides.

Gelsinger stated that the margins are under pressure, but he assured that it will remain above 50 percent because the company is currently at a pivot point.

"For gross margin, with the impact of our investment in capacity and the acceleration of our process technology, we expect gross margins between 51 and 53% over the next two to three years before moving upward," Intel's chief financial officer George Davis furthered on Market Watch.

Moreover, the tech giant reported more than $6 billion of their 2021 third-quarter net income, which is equivalent to $1.67 per share--beating the previous year report. On a positive note, the revenue has increased from approximately $18 billion to more than $19 billion in the year-ago quarter.