Intel CEO Bob Swan on outsourcing chip manufacturing

Bob Swan, CEO of Intel, joins "Squawk Alley" to discuss the potential outsourcing of 7-nanometer chip manufacturing. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Shares of Intel were down more than 10% Friday, a day after the company’s third-quarter earnings revealed new weakness in its data center business and reaffirmed the delay of its latest-generation chips.

Intel’s Data Center Group, which derives revenue from enterprises and government customers, saw a 7% revenue drop in the quarter. Overall, Intel’s revenue in the quarter ended Sept. 26 declined 4% on an annualized basis.

Bank of America on Friday downgraded Intel’s stock to underperform from neutral, pointing to uncertainty around the company’s new chips and a lack of a plan to fix or update its manufacturing challenges.

Intel said in July it delayed its 7 nanometer processors until 2022 for computers and the following year for servers. The company could begin relying on other companies to manufacture its chips.

“We have the decision to make about whether to build that next generation of products on Intel’s manufacturing footprint, on third party manufacturing footprint or on a mix of both. We’ve been designing our products to have the inherent flexibility to make those decisions over time,” Intel CEO Bob Swan told CNBC’s “Squawk Alley.”

Swan said Thursday that Intel likely won’t be able to provide more information until January.

“The result could be years of uncertainty, with customers at a minimum moving more share to AMD for risk mitigation, and increasingly for a more compelling price/performance/feature list,” Bank of America analysts said in Friday’s note.

Shares of competing chipmaker AMD, which is already selling 7 nanometer chips for PCs and graphics cards, were up more than 1%. As of Thursday’s close, the company’s stock was up more than 73% year to date.

As of Thursday’s closing, Intel shares were down about 10% this year.

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