Intel shares sank 20 percent in after-hours trading on Thursday after it said a fatal explosion at a manufacturing plant in Israel would reduce its revenue by $600 million (£448m) over the next two quarters.

Intel also warned of sluggish PC chip revenues through the first half of next year, as soaring memory prices depress PC sales.

Finance chief David Zinsner said Intel planned to begin resuming production at the damaged plant at its Kiryat Gat factory by the end of this week, after a two-week shutdown.

Data centre chips

The company said it expected a $300m reduction in gross margins in the fourth quarter and a similar effect on revenues in the first quarter of 2027 due to the blast.

Intel said it is in the process of determining which silicon wafers can be salvaged after the explosion.

The Kiryat Gat plant, one of Intel’s major manufacturing hubs, produces data centre chips using the company’s 10 nanometre process.

Toxic gas

Intel has seen strong demand for its server chips amid a widespread build-out of AI data centres, but the company said its PC chip business fell 5 percent in the third quarter to $8.10bn, missing analysts’ predictions.

The explosion at the southern Israel fab in mid-October killed two people and seriously injured a third, while also releasing toxic nitrogen trifluoride gas.

The incident occurred while trucks were unloading gas into tanks at the factory, with police initially saying the blast appeared to have occurred due to a malfunction.