What happened

Shares of chip giant Intel (NASDAQ:INTC) slumped for the second day in a row following reports of two CPU security flaws. Patches for major operating systems are in the works, but these fixes will reportedly cause a performance hit for Intel processors. The company downplayed these issues in a statement on Wednesday, but it wasn't enough to prevent to stock from shedding another 3.4% by 11:30 a.m. EST on Thursday. Shares of Intel were down as much as 5.7% earlier in the day.

So what

Two separate security flaws were discovered by researchers and disclosed this week. The first, "Meltdown," only affects Intel processors, while the second, "Spectre," affects essentially every CPU, including products from Advanced Micro Devices (NASDAQ:AMD). Spectre is reportedly the more serious threat, with Meltdown more difficult to exploit and easier to patch.

The Intel logo.

Image source: Intel.

These revelations create two problems for Intel. First, from a public relations perspective, the company's products being at the center of these reports, despite other vendors' products also being affected, could push customers to rivals. AMD is aiming to win market share in the PC CPU market with its Ryzen chips, and this news may be enough for the company to gain some share.

Second, the patches required to kill the Meltdown exploit will reportedly cause Intel processors to take a performance hit. The original report from The Register claimed a performance penalty between 5% and 30% is likely. Intel claims that the performance impact will be workload-specific, and will not be significant for the average computer user.

Now what

AMD will likely try to take advantage of this controversy. In a statement, the company claimed its products were largely unaffected: "Due to differences in AMD's architecture, we believe there is a near zero risk to AMD processors at this time."

If there turns out to be a meaningful performance impact for Intel chips, particularly its data center chips, AMD stands to benefit. AMD's EPYC server chips are in the beginning stages of assaulting Intel's server chip monopoly, and a closing of the performance gap could do wonders for its market share.

But even if the performance impact is inconsequential, AMD could win business simply by not being at the center of this storm.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.