Intel reveals $600 million revenue impact from factory explosion as PC demand weakens

Intel has revealed that a recent factory explosion could cost the company about $600 million in revenue across two quarters. The incident, which occurred earlier this month at its semiconductor manufacturing facility in Israel, forced production to halt for roughly two weeks. The disclosure comes alongside weaker-than-expected financial guidance and continued uncertainty surrounding PC demand.

According to Reuters, Intel CFO David Zinsner confirmed that the production disruption is expected to reduce fourth-quarter revenue by approximately $300 million. It will also negatively affect gross margins by around 200 basis points, with a similar revenue impact anticipated in the first quarter of 2027.

The Kiryat Gat facility primarily manufactures data centre processors using Intel's 10 nm manufacturing process. The company is still assessing which silicon wafers can be recovered and used following the incident, meaning the full extent of the disruption remains uncertain.

The October 14 accident resulted in the deaths of two workers and serious injuries to a third, according to local reports. Intel has said it is cooperating with the relevant authorities investigating the incident. Zinsner expects production at the facility to begin ramping up again by the end of this week.

The manufacturing disruption comes at a difficult time for Intel's PC business. In its third-quarter financial results, the company reported revenue of $16.51 billion, representing a 21% year-over-year increase. However, PC processor revenue declined by 5% to $8.1 billion, while the data centre and AI business grew by 78% to $7.3 billion.

Intel now expects fourth-quarter revenue between $15 billion and $16 billion, below analysts' $17.07 billion estimate. The company also expects weakness in the PC market to persist through at least the first half of 2027. However, demand for its server processors remains strong, with increasing manufacturing capacity now a key priority.