Intel discontinues manufacturing facilities in Germany and Poland, confirms increased redundancies
Intel, one of the world's leading semiconductor manufacturers, is facing significant challenges in its foundry business. The company's CEO, Lip-Bu Tan, announced a new AI strategy in an attempt to turn the company's fortunes around.
Financial Performance
In 2025, Intel's foundry business generated $4.42 billion in sales, a 3.2% increase year-over-year. However, the business suffered an operating loss of $3.17 billion. This loss included an $800 million impairment charge for equipment that is now considered unusable and cannot be repurposed due to lack of customer demand, even internally. Since 2023, the foundry business has accumulated $45.5 billion in revenue but suffered $25.8 billion in cumulative losses, illustrating ongoing underperformance and underutilization of manufacturing capacity.
Project Cancellations and Job Cuts
In response to these challenges, Intel has canceled its planned foundry projects in Germany and Poland, halting expansion efforts in these European locations. The company also announced plans to cut approximately 24,000 to 25,000 jobs, about 15% of its global workforce. These cuts include a halving of management layers aiming to increase efficiency and reduce costs. Intel aims to have a total workforce of about 75,000 employees by the end of the year.
Strategic Shifts
Intel is shifting some assembly and test operations from Costa Rica to Vietnam and Malaysia, retaining some design engineers in Costa Rica. The future of advanced process development, including the 14A node, is uncertain and contingent upon securing firm customer commitments. Intel is no longer willing to invest in foundry process technologies without guaranteed returns from external customers. There is also potential for pausing or discontinuing the foundry business if customer traction fails to improve.
AI Strategy
Tan claimed Intel has already started incubating new capabilities and attracting new talent for AI. The company will focus its AI efforts on developing a cohesive silicon, system, and software stack strategy. Intel will no longer receive $1.9 billion approved by the European Commission as a state aid package towards an assembly and testing facility in Poland.
The completion of the Ohio site has been pushed back several times, with the latest being earlier this year when Intel said it would not now happen before 2030. Intel remains "deeply committed" to investing in the US.
Financial Results
Intel's Q2 2025 financial results showed revenue was essentially flat compared with a year ago, at $12.9 billion. The troublesome Foundry division saw its revenue rise by 3 percent compared with a year ago to $4.4 billion.
In a court ruling, a federal judge granted Intel a motion to dismiss a lawsuit against the company by investors. Tan said that these decisions are critical to strengthening Intel's competitive position going forward.
[1] Intel's Foundry Business in Trouble as CEO Outlines New AI Strategy
[2] Intel Cancels Foundry Projects in Germany and Poland
[3] Intel to Cut 15% of Global Workforce
[4] Intel's Foundry Business Struggles to Establish Itself in the Market
[5] Intel's Foundry Business: A Look at the Financial Numbers
[1] The new AI strategy announced by Intel's CEO, Lip-Bu Tan, aims to leverage artificial intelligence technology to potentially revitalize the company's struggling foundry business.
[2] As part of its strategic shifts, Intel is enhancing its software regulation by incubating new AI capabilities and focusing on developing a comprehensive silicon, system, and software stack strategy.
