Reuters United States
Jan 05, 2018, 04.57 AM
Intel Corp shares fell nearly 2 percent on Thursday as investors worried about the potential financial liability and reputational hit from recently disclosed security flaws in its widely used microprocessors.
The largest chipmaker had confirmed on Wednesday that flaws reported by researchers could allow hackers to steal sensitive information from computers, phones and other devices.
Apple Inc, Microsoft Corp and other software makers have issued patches to protect against the vulnerabilities.
Intel may be on the hook for costs stemming from lawsuits claiming that the patches would slow computers and effectively force consumers to buy new hardware, and big customers will likely seek compensation from Intel for any software or hardware fixes they make, security experts said.
"The potential liability is big for Intel,” said Eric Johnson, dean of Vanderbilt University’s Owen Graduate School of Management. "Everybody will be scrambling over the next few days to figure out just how big it is."
Intel has said that the patches for the bugs would slow its chips down somewhat but that most users will not notice.
Amazon Web Services (AWS), the largest seller of cloud computing services, said in a statement it does not "expect meaningful performance impact for most customer workloads."
Microsoft and Alphabet Inc’s Google both said in statements on their websites that they expect few performance problems for most of their cloud computing customers.
But the incident is likely to spur cloud companies to press Intel for lower prices on chips in future talks, said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, which owns shares in Intel.
"What (Intel’s cloud customers) are going to say is, ‘You wronged us, we hate you, but if we can get a discount, we’ll still buy from you," Forrest said.
Forrest also expects Intel will have to increase its chip development spending to focus on security.