Intel's Dow status under threat as struggling chipmaker's shares plunge

Intel employs some 4,900 people in Ireland, making it one of the State’s largest employers.

Intel was one of the first two tech companies to join the Dow Jones Industrial Average during 1999's dot-com era, along with Microsoft. Now, a slump in its share price could cost the American chipmaker its place in the blue-chip index.

Analysts and investors said Intel was likely to be removed from the Dow, pointing to a near 60% decline in the company's shares this year that has made it the worst performer on the index and left it with the lowest stock price on the price-weighted Dow.

A removal will hurt Intel's already bruised reputation. The company has missed out on the artificial intelligence boom after passing on an OpenAI investment and losses are mounting at the contract manufacturing unit that the chipmaker has been building in hopes of challenging TSMC.

Intel employs some 4,900 people in Ireland, making it one of the State’s largest employers. Last month, it said it would cut 15% of its workforce and suspend its dividend in the fourth quarter as the chipmaker pursues a turnaround centred around its loss-making manufacturing business.

To fund a turnaround, Intel suspended dividends and announced lay-offs affecting 15% of its workforce during its earnings report last month. But some analysts and a former board member believe the moves might be too little, too late for the chipmaker.

"Intel being removed was likely a long time coming," said Ryan Detrick, chief market strategist at the Carson Group. The latest results may be the final push needed to finally see the company removed from the Dow, Detrick added.

S&P Dow Jones Indices, which manages the Dow, declined to comment on whether Intel could be removed from the index.

Changes to the index are made as needed and the last update happened in February when struggling pharmacy chain Walgreens Boots Alliance was replaced by Amazon.com.

Stock price is a key element for inclusion in the Dow, unlike the S&P 500 index which takes into account market value.

The Dow's selection committee monitors whether the highest-priced stock in the index has a price more than 10 times that of the lowest. Currently, the highest weighted stock, UnitedHealth Group, is priced about 29 times higher than Intel.

Reuters