Aug 4 (Reuters) - Fitch downgrading U.S. chipmaker

Intel's ( INTC ) credit rating by one notch on Monday, according to a

note by the ratings agency, which assigned a negative outlook to

Intel's ( INTC ) rating.

Fitch downgraded Intel ( INTC ) to BBB from BBB-plus, placing

it just two notches shy of junk credit status.

The downgrade follows Fitch's assessment that Santa Clara,

California-headquartered Intel ( INTC ) faces heightened challenges

maintaining demand for its products. Fitch cited growing

competition from peers such as Dutch rival NXP Semiconductors ( NXPI )

, Broadcom Inc ( AVGO ) and Advanced Micro Devices ( AMD )

.

"Credit metrics remain weak and will require both stronger

end markets and successful product ramps, along with net debt

reduction over the next 12-14 months" for Intel ( INTC ) to recover its

recent ratings, Fitch analysts wrote on Monday.

Fitch added that while Intel ( INTC ) holds a better market position

than other similarly rated peers, its financial structure is

relatively weaker and it faces "higher execution risk."

Intel ( INTC ) still enjoys a strong market position in the provision

of PCs and traditional enterprise servers, Fitch noted, while

warning the company faces heightened PC competition from

Qualcomm ( QCOM ) and AMD.

Intel ( INTC ) will need to ramp up its PC shipments while also

reducing its balance sheet debt to recover its previous credit

ratings, Fitch said.

The ratings agency called Intel's ( INTC ) liquidity profile "solid,"

which as of June 28 consisted of a $21.2 billion mix of cash,

cash equivalents and short-term investments, as well as an

untapped $7 billion credit revolver. It also had an undrawn $5

billion, 364-day revolver that will come due in January 2026,

Fitch said.

Fellow ratings agency S&P Global similarly downgraded

Intel's ( INTC ) credit rating to BBB from BBB-plus in December, while

Moody's Ratings downgraded its senior unsecured debt's rating in

August last year.