Semiconductor giant Intel (NASDAQ:INTC) is reacting to the COVID-19 pandemic by tapping the brakes on its massive share buyback program.

What Intel is doing today

In an SEC filing early Tuesday morning, Intel said that it was suspending its stock repurchase operations "in light of the COVID-19 pandemic." The company added $20 billion to its buyback authorization in October, and had aimed to exhaust that additional cash in less than 18 months. Now, the company plans to conserve its cash assets through the difficult period ahead.

A sack marked with a large dollar sign sits on a table, surrounded by piles of golden coins.

Image source: Getty Images.

Financial background

Intel has already spent about $7.6 billion of the $20 billion buyback authorization in the last two quarters, including $4.1 billion in the first quarter, which ends on March 31. To put those numbers into perspective, Intel's market cap peaked at nearly $300 billion in January before slumping to its current level of $229 billion.

"Intel's management believes the suspension, while conservative, is prudent given uncertainty regarding the length and severity of the pandemic," it said in its SEC filing. Dividend payments will continue as before, and the buybacks could be reinstated at any time. Furthermore, Intel's factories are still running, though it has taken steps to protect the health and safety of its employees.

Market reaction

Some might say that Intel should be accelerating its buybacks while stock prices are low, but there's nothing wrong with conserving spare cash in times of economic crisis. Intel's investors apparently approved of the move. Share prices were up by around 6% in mid-morning trading, in line with the gains of the tech-heavy Nasdaq at the same point in the session. The broader S&P 500 was showing a slightly better gain of around 7%.