Intel Scales Back Manufacturing Expansion Plans

Intel CEO Lip-Bu Tan is advancing his strategy to eliminate inefficiencies within the company, which involves canceling several manufacturing initiatives.

The semiconductor giant announced in its second-quarter earnings report on Thursday that it will postpone or completely halt multiple manufacturing projects. Specifically, Intel confirmed it will not proceed with previously planned ventures in Germany and Poland. These included an assembly and testing facility in Poland and a chip fabrication plant in Germany. Both projects had been in a state of uncertainty since their suspension in 2024, shortly after initial announcements.

The company also intends to streamline its testing operations in Costa Rica by consolidating them into its existing facilities in Vietnam and Malaysia.

"Regrettably, our capacity investments in recent years significantly outpaced demand, proving to be unwise and excessive," Tan stated during the second-quarter earnings call. "Our manufacturing footprint has become unnecessarily fragmented. Moving forward, we will expand capacity strictly based on confirmed volume commitments and align capital expenditure precisely with tangible milestones, not ahead of them."

Intel additionally revealed further delays for its $28 billion Ohio chip factory. Originally scheduled to launch in 2025, the facility had already experienced one delay earlier this year in February.

The second quarter marked Tan's first full quarter leading Intel. Appointed CEO on March 12, he assumed the role one week later. Shortly after taking charge, Tan outlined his plan to address company inefficiencies through divesting non-core business units and optimizing operations.

"We have substantial work ahead in building a lean and efficient organization, a process we've begun in earnest and will remain my primary focus throughout Q3," Tan commented during the Q2 earnings call. "Our objective is to minimize inefficiencies and redundancies while enhancing accountability across all company levels."

Tech and VC heavyweights join the Disrupt 2025 agenda

Netflix, ElevenLabs, Wayve, Sequoia Capital — just a few of the heavy hitters joining the Disrupt 2025 agenda. They’re here to deliver the insights that fuel startup growth and sharpen your edge. Don’t miss the 20th anniversary of TechCrunch Disrupt, and a chance to learn from the top voices in tech — grab your ticket now and save up to $675 before prices rise.

Tech and VC heavyweights join the Disrupt 2025 agenda

Netflix, ElevenLabs, Wayve, Sequoia Capital — just a few of the heavy hitters joining the Disrupt 2025 agenda. They’re here to deliver the insights that fuel startup growth and sharpen your edge. Don’t miss the 20th anniversary of TechCrunch Disrupt, and a chance to learn from the top voices in tech — grab your ticket now and save up to $675 before prices rise.

The company also provided updates regarding its workforce, which has undergone multiple reduction rounds. Intel has reduced its workforce by approximately 15% and expects to conclude the year with 75,000 employees. Tan noted that recent layoffs enabled the elimination of 50% of management layers.

In June, an internal memo revealed Intel's plan to cut 15% to 20% of positions within its Intel Foundry unit, which designs and manufactures chips for external clients. According to the company's annual SEC filing, Intel employed 108,900 people at the end of 2024, down from 124,800 employees at the close of 2023.