Intel continues to pull back on its manufacturing projects
In a significant strategic shift, semiconductor titan Intel is actively scaling back its global manufacturing ambitions, including the complete cancellation of previously announced projects in Germany and Poland, and further delays to its massive Ohio chip factory. This move is part of an aggressive overhaul led by CEO Lip-Bu Tan, aimed at shedding inefficiencies and streamlining the company’s vast operations, as revealed in its recent second-quarter earnings report.
The decision to halt plans for a chip factory in Germany and an assembly and testing facility in Poland marks a definitive end to projects that had been in limbo since their suspension in 2024. These initiatives, announced with much fanfare, underscore a broader re-evaluation of Intel’s capital expenditures and global footprint.
Further demonstrating this consolidation, Intel announced plans to centralize its test operations, moving them from Costa Rica to its established sites in Vietnam and Malaysia. This aims to create a more focused and efficient operational structure.
Addressing the company’s trajectory during the second-quarter earnings call, CEO Lip-Bu Tan stated, “Unfortunately, the capacity investment we make over the last several years were well ahead of demand and were unwise and excessive. Our factory footprint has become needlessly fragmented. Going forward, we will grow our capacity based solely on the volume commitments and deploy capex lockstep with the tangible milestones, and not before.” This statement highlights a new, more cautious approach to expansion, prioritizing demand-driven growth over speculative investment.
One of the most notable delays impacts the colossal $28 billion Ohio chip factory, which was initially slated to open in 2025. This project has now seen its completion pushed back further, after an initial delay announced in February 2025. The repeated deferrals signal Intel’s commitment to optimizing its investments and ensuring alignment with strategic priorities.
This period marks the first full quarter under Lip-Bu Tan’s leadership, who assumed the CEO role on March 12, 2025. Since his appointment, Tan has been vocal about his strategy to eliminate inefficiencies, including the potential spin-off of non-core units and a comprehensive streamlining of operations. “We have much work to do in building a clean and streamlined organization, which we have started in earnest, and it remain an area of focus for me during Q3,” Tan emphasized, underscoring the ongoing commitment to structural reform.
The company also provided an update on its workforce, which has undergone significant reductions. Intel has cut approximately 15% of its employees and aims to conclude the year with 75,000 workers. These layoffs have reportedly eliminated 50% of management layers, reflecting a drastic effort to flatten the organizational structure and increase accountability. Earlier in June 2025, an internal memo indicated plans to lay off 15% to 20% of workers within the Intel Foundry unit, responsible for designing and manufacturing chips for external clients. This follows a broader trend, with Intel’s total workforce dropping from 124,800 at the end of 2023 to 108,900 by the end of 2024, according to its annual report filed with the Securities and Exchange Commission.
Intel’s pivot towards a leaner, more disciplined operational model under CEO Lip-Bu Tan signifies a pivotal moment for the semiconductor giant as it navigates evolving market demands and seeks to reassert its competitive edge in the global tech landscape.
