Fitch Ratings has downgraded Intel's (NASDAQ:INTC) long-term issuer default rating and senior unsecured ratings to 'BBB' from 'BBB+' and affirmed its short-term IDR and commercial paper rating at 'F2'.

Fitch downgrading U.S. chipmaker Intel's credit rating by one notch on Monday, according to a note by the ratings agency, which assigned a negative outlook to Intel's rating.

Fitch has slashed Intel's credit rating down to just a couple of notches from junk status, wants to see 'successful product ramps' in the future.

Fitch downgraded Intel's credit rating to BBB with a negative outlook, citing weak demand, fierce competition from AMD and Qualcomm, and ongoing financial and operational challenges despite a recent revenue beat.

Intel (NASDAQ:INTC) got a surprise downgrade from Fitch this week, yet its stock popped about 3.6% anyway. The agency dialed down Intel's long-term credit rating from BBB+ to BBB, pointing to a tougher demand backdrop and the need for debt reduction and stronger product ramps over the next year or two.

Fitch also noted that while Intel’s plans for its foundry strategy were net credit positive, they were subject to high execution risks. Still, the ratings agency noted that Intel’s liquidity position was “solid,” and that its cost cutting measures stood to greatly increase profitability. Intel’s asset sales were also supporting liquidity.