The company predicted a surprise loss for the first quarter and its revenue forecast was $3 billion below estimates as it also struggled with slowing growth in the data center business.

    Intel shares fell more than 7%, while rival Advanced Micro Devices (AMD.O) and Nvidia (NVDA.O) recovered from steep premarket losses to trade flat. Intel supplier KLA Corp (KLAC.O) fell 5% after its dismal forecast.

    Analysts said that puts Intel at a disadvantage even when the data center market bottoms out, expected in the second half of 2022, as the company would have lost even more share by then.

    "It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," brokerage Bernstein said.

    "The magnitude of the deterioration is stunning, and brings potential concern to the company's cash position over time."

    Intel, which plans to cut $3 billion in costs this year, generated $7.7 billion in cash from operations in the fourth quarter and paid dividends of $1.5 billion.

    With capital expenditure estimated to be around $20 billion in 2023, analysts said the company should consider cutting its dividend.