Intel Tops Revenue Estimates but Cuts Foundry Spend
In a decisive second-quarter report, Intel beat Wall Street’s revenue expectations while announcing a sharp pivot in its chip investment strategy. Under new CEO Lip-Bu Tan, the company is scaling back foundry operations and halting major factory expansions, signaling a shift toward financial discipline.
Tan’s message was clear: the era of “blank checks” is over.
Earnings Snapshot: A Mixed Bag
Intel reported $12.86 billion in revenue, surpassing the expected $11.92 billion. Despite the revenue beat, the company posted a net loss of $2.9 billion, or 67 cents per share, due largely to an $800 million impairment charge tied to unused tools. Adjusted earnings showed a loss of 10 cents per share.
Looking ahead, Intel forecasts $13.1 billion in Q3 revenue, just ahead of analyst expectations. It expects to break even in earnings, falling short of the projected 4 cents per share.
Tan’s Tough Start: Layoffs, Restructuring, and Realignment
Taking over in March, Lip-Bu Tan stepped into a company in flux. In a memo to employees, he admitted the start had “not been easy.” The firm has now completed most of its planned layoffs, reducing its workforce by 15%. Intel aims to end 2025 with 75,000 employees, part of a larger plan to slash $17 billion in operating costs.
Tan emphasized his focus on reducing bureaucracy, flattening leadership, and reclaiming market share—especially in data center chips, where AMD continues to gain ground.
Foundry Investments: Scaled Back, Not Scrapped
One of the biggest shake-ups came in Intel’s foundry division. Despite generating $4.4 billion in revenue, the unit reported a $3.17 billion operating loss.
To control costs, Tan announced:
Canceled fabs in Germany and Poland
Consolidated operations in Vietnam and Malaysia
Slowed construction at the Ohio plant, pending demand
Selective buildout of the 14A process, tied to confirmed customer orders
Tan criticized Intel’s recent expansion spree, calling it premature.
“We invested too much, too soon—without adequate demand,” he said. “Our footprint became fragmented and underutilized.”
A Tighter Grip on Design and Direction
Tan also declared that all chip designs will now need his personal approval before tape-out—the final stage before manufacturing. This level of executive oversight, rarely seen in large tech firms, underscores his intent to monitor costs and outcomes closely.
“There are no more blank checks. Every investment must make economic sense,” Tan wrote.
Business Unit Highlights
Intel’s client computing group—which sells PC chips—generated $7.9 billion, a 3% drop year over year. Meanwhile, the data center and AI chip division saw a modest 4% increase, earning $3.9 billion.
Though competition is fierce, Tan remains committed to regaining Intel’s edge in enterprise computing. The search for a permanent head of the data center unit is already underway.
Stay tuned to Maple Wire for more sharp insights into chip industry shifts, corporate strategy, and tech earnings.
