Intel shares hit by news of major chip security flaw

Intel shares plunged on Thursday, marking their biggest one-day drop in more than a year, a day after a report said mobiles and computers using Intel chips were vulnerable to being hacked.
Intel shares fell 3.4 per cent after news broke of security flaws in microprocessors made by the company.
Intel shares fell 3.4 per cent after news broke of security flaws in microprocessors made by the company.PHOTO: REUTERS

NEW YORK - News that computer security experts have discovered two major security flaws in Intel chips that could allow hackers to steal the entire memory contents of a computer have hit the company's shares.

The British tech website Register reported on Tuesday (Jan 2) the "fundamental design flaw" affects virtually every microprocessor made by Intel, which makes chips used in more than 90 per cent of the computer servers that underpin the Internet and private business operations.

The report said chips made by Intel rival Advanced Micro Devices (AMD) were not affected.

On Wednesday, Intel shares fell 3.4 per cent while AMD stocks were up 5.2 per cent. Intel shares rose 27 per cent in 2017 versus AMD's 9 per cent decline.

Wall Street investment firm Bernstein said Intel's alleged security flaw could cost the chipmaker a lot of money.

Its analyst Stacy Rasgon said the financial liability for Intel could exceed those of past debacles such as the "Pentium Bug" of the 1990s, CNBC reported on Wednesday.

Intel was hit by a US$475 million charge for the Pentium FDIV bug in 1994 and a US$700 million charge for the Cougar Point chipset problem in 2011.

"The current problem feels much bigger" than the previous two incidents, Ragson wrote in a note. Intel's "potential liability remains the biggest open-ended question we have at the moment", he said.

He added that the damage to the company may outweigh any benefit of customers buying new PCs, or server computers, with new Intel parts down the road.

The analyst reaffirmed his US$34 price target for Intel shares, which represents a 27 per cent downside to the stock's Tuesday's close, Barron's Asia reported.