Intel extends losses as worries over chip security linger

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Intel reveals design flaw in chips giving hackers access to data

Wall Street Journal Global Economics Editor Jon Hilsenrath on the fallout over an Intel design flaw and the outlook for Federal Reserve policy.

(Reuters) - Intel Corp (NASDAQ:INTC) shares fell as much as 5 percent on Thursday, marking their biggest one-day drop in more than a year, a day after a report said mobiles and computers using its chips were vulnerable to being hacked.

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Intel's shares were trading at $43.16 in heavy early morning trading. They closed down 3.4 percent on Wednesday.

Security researchers on Wednesday disclosed a set of flaws that they said could let hackers steal sensitive information from nearly every modern computing device that uses chips from Intel, Advanced Micro Devices Inc <AMD.O> and ARM Holdings.

Intel said it has started providing software and firmware updates to mitigate the security issues, which it claimed would not have any financial or market-share impact.

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The chipmaker said the issue was not a design flaw, but it would require users to download a patch and update their operating system.

"We believe the impact to Intel's financials and long-term market share is minimal," Instinet analyst Romit Shah wrote in a note.

Evercore analysts agreed with Shah and said they do not expect a material impact as Intel has previously has provided patches for several bugs without causing financial repercussions.

Morgan Stanley analysts said the concerns over the decline in performance of its chips due to the flaws were overblown.

"We see this as primarily a public relations issue, rather than a business issue," the analysts wrote in a note.

(Reporting by Siddharth Cavale in Bengaluru; Editing by Sayantani Ghosh and Arun Koyyur)

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